Motor Vehicle Exemptions: An Overview | Tom Orr Law

Motor Vehicle Exemptions: An Overview

Motor Vehicle Exemptions: An Overview

For many of us, especially if we reside in suburban or rural areas, living without our cars is not an option. The same holds true for my clients, who often worry about what will happen to their vehicles and the like after declaring bankruptcy.

Fortunately, almost all states provide some type of motor vehicle exemption, which allows you to keep a certain amount of these assets safe during bankruptcy.  To obtain a motor vehicle exemption, you’ll first need to know how much your vehicle is worth and your state’s exemption amounts.

Determining Replacement Value or Equity

To determine the replacement value of your motor vehicle, check out Kelley Blue Book at or National Automobile Dealers Association at for estimated values. Value your motor vehicle based on private-party value, which is the amount you’d get if you sold the vehicle yourself. This mimics what the trustee, the person assigned to your bankruptcy case, will do.

You’ll also need to subtract any amount you still owe on your vehicle. For example, a car valued at $8,000 with a loan of $6,000 has an equity or replacement value of $2,000.

Once you’ve determined your vehicle’s equity or replacement value, then you’ll need to compare it to your state’s exemption amounts.

Determining Exemption Amount

Each state has exemption laws that detail the type and amount of property a bankruptcy filer can protect. In New Jersey, however, you can choose between using state or federal exemptions.  In almost every instance, federal exemptions are more favorable. Under federal bankruptcy laws, motor vehicles are exempted up to $3,675.

New Jersey residents can also use a wildcard exemption (up to $1225, plus an additional $11,500 of any unused portion of the home exemption) and combine it with the federal amount. This means, at the minimum, up to $4,900 ($3675 + $1225) of your vehicle’s value is exempted or protected.

If the exemption amount ($4900) is greater than your vehicle’s equity, then you can keep your vehicle.  If not, then what happens next depends on the bankruptcy chapter you filed.

Our clients do not lose their vehicles when filing bankruptcy.  An experienced attorney will review exemptions with you before the case is filed.

If you would like to learn more about how to protect your motor vehicles during bankruptcy, please contact me to schedule an appointment.


Hundreds of thousands of Americans, including consumers and business owners, file for bankruptcy each year. While many think this situation is the result of overspending, most cases are due to financial hardship such as job loss, costly medical bills, divorce, or a poor economy.


I’ve been practicing bankruptcy law in Burlington, New Jersey for over 33 years. With just one location, I can focus exclusively on helping my clients make their way not only through bankruptcy, but well past it. We will work together to explore all of your options and determine if bankruptcy is the right choice for you. The goal is to get you on the path to a new beginning.


If you’re losing sleep, feeling scared or even embarrassed, let’s talk. There is life after bankruptcy and it starts here. My offices are located in downtown Burlington, near the Riverline train stop. I provide Saturday and evening hours as needed. I offer payment arrangements to fit your budget. Contact my office today at ​​609-386-8700.


Start your path towards a new financial beginning. Contact our offices today!
Scroll to Top