One of the most common questions people have when filing for bankruptcy is if they can keep multiple vehicles during Chapter 13 in New York. It isn’t uncommon for people to own more than one vehicle, so this is something that you should understand before you begin the process of filing for bankruptcy.
At Grady BK, PLLC, we understand just how confusing and overwhelming bankruptcy can feel for New York residents. That is why we prioritize a personalized approach so that each of our clients feels as though they are our only client. In this article, we will discuss whether or not you can keep multiple vehicles during Chapter 13 in New York and how auto loans are treated during bankruptcy.
How Chapter 13 Treats Vehicles
In the majority of cases, Chapter 13 bankruptcy provides greater flexibility regarding the assets you can keep than Chapter 7 bankruptcy. This is because Chapter 13 creates a personalized repayment plan that lasts 3 to 5 years, allowing you to pay off the majority of your debts in a realistic way. It is also designed more for individuals with higher and steadier incomes.
The good news for New York residents is that you can keep your car when you file for Chapter 13 bankruptcy in NY. This is the case even if you are currently paying off your auto loan and do not own it outright. You just continue to make your regular payments and keep the vehicle. If you owe any arrears on the vehicle you can pay those back in the Chapter 13 bankruptcy.
Keep in mind that how a car is handled during Chapter 13 often depends on whether you are making payments or you own the car outright. If you own your vehicle, you may need to use a bankruptcy exemption in NY, to cover the total equity of the vehicle. New York has a wildcard exemption that can help you keep your vehicle as long as you aren’t also using the homestead exemption.
A bankruptcy attorney can help evaluate your situation and any equity you have in your vehicles. From there, they can help you find different bankruptcy exemptions to cover this.
Can You Keep More Than One Vehicle?
Now that you know how Chapter 13 bankruptcy treats vehicles, is it possible to own multiple vehicles during Chapter 13 in New York? And the simple answer to this is yes. In many cases, those who qualify for Chapter 13 bankruptcy can also keep multiple vehicles throughout the duration of their repayment plan.
For this to be possible, you must have a steady income that allows you to continue making payments on multiple vehicles. You may also need to provide some type of justification for why you need to own more than one vehicle.
If you own multiple vehicles outright, you can always keep all of them with the use of bankruptcy exemptions.
How Vehicle Loans Are Handled in Chapter 13
Because vehicles are depreciating assets that start to lose value the minute you drive them off the lot, Chapter 13 may use a cramdown. A cramdown helps to reduce the balance on your loan to reflect the actual worth of the vehicle.
An example of how a cramdown could be applied to your Chapter 13 repayment plan is if you owe $20,000 on your vehicle, but its current market value is only $8000. With a cramdown, your Chapter 13 plan would only require you to pay the $8000, and once you do this, the car would be yours. In order to do a cram down your car loan has to be at least 2.5 years old.
Additionally, the bankruptcy court will set an interest rate for your loan, which is often lower than the original interest rate that you got when financing your car.
It is always recommended that you get the help of a bankruptcy attorney in New York before you move forward with filing for bankruptcy. An attorney can help you better understand what your options are and how your vehicle loan will be treated during Chapter 13. And if you have multiple vehicles, an attorney can help you find methods of keeping all of them, if that is your goal.
What If You’re Behind on Payments?
When you file for Chapter 13 bankruptcy, an automatic stay takes effect, protecting you from all collection efforts. So, this can also help to stop repossession if you have fallen behind on your car payments.
If you have missed payments, these will be added to your repayment plan so that you can catch up and pay back what you owe. This is done in a realistic way, taking into account your other debts and your income.
Just make sure you are able to keep up on your payments going forward; otherwise, you could put your Chapter 13 repayment plan in jeopardy.
FAQ:
Can I keep two cars in Chapter 13 in New York?
Usually, yes. If you are making payments on the vehicles, you will need to prove that you can afford the monthly payments and that there is some reason why you need both vehicles. If you own them outright, you can always keep them by using bankruptcy exemptions to cover the equity of the vehicles.
What happens if one car has no loan?
You can protect vehicles that are paid off with bankruptcy exemptions.
New York’s Top Compassionate Bankruptcy Attorney
Contrary to popular belief, you won’t lose everything when you file for Chapter 13 bankruptcy in New York, which means that you may be able to keep all of your vehicles. At Grady BK, PLLC, we help provide clarity to the bankruptcy process so that you know what is and isn’t allowed. You can trust us to prioritize your case and be available if you have any questions or concerns.
At Grady BK, PLLC, we can help you begin the bankruptcy process, no matter what stage you are in. We will also be available throughout the entirety of your bankruptcy case so that you are never going through this on your own.
Contact us today at 315-299-9005 to discuss your situation with an experienced bankruptcy attorney in New York. Our team at Grady BK, PLLC, is here to answer and address all of your questions regarding the bankruptcy process.
