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Bankruptcy Exemptions

New Jersey permits either the Federal Exemptions or the New Jersey State Exemptions. People who live in New Jersey may elect the New Jersey state exemptions. However, these are very limited and do not allow a person who files a bankruptcy to keep as much property as does the exemption available under federal law.

WHAT PROPERTY CAN I GET TO KEEP IF I FILE A BANKRUPTCY ?

 

Summary:

New Jersey:

In New Jersey the following assets is exempt can be retained in a 7 Bankruptcy, if you elect the state exemptions::

  • Goods and chattels, shares of stock or interests in any corporation and personal property of every kind, not exceeding in
    value, exclusive of wearing apparel, $1,000.00, and
  • all wearing apparel generally are reserved for a judgment debtor's family use before and after death, and are not subject to execution. (Sec. 2A:17-19.)
  • Household goods and furniture not exceeding $1,000.00 in value of a person shall also be exempt from attachment, except for a debt incurred in the purchase thereof. (Sec. 2A:26-4.)
  • disability benefits, sickness insurance policies, workers' compensation benefits, and retirement benefits are generally exempt from execution. (Sec. 17:18-12, 34:15-29, 43:21-15(c), 43:13-9, 37.5.)

Federal Exemptions:

If you elect the Federal exemptions, the following assets can be retained, under Title 11 U.S.C. Section 522:
Married couples double the amount of the following federal exemptions:

  • Homestead • Real property, including co-op or mobile home, to $18,450; unused portion of homestead to $9,250 may be applied to any property;
  • Life insurance payments for person you depended on, needed for support;
  • Life insurance policy with loan value, in accrued dividends or interest to $9,850;
  • Unmatured life insurance contract, except credit insurance policy;
  • Alimony, child support needed for support;
  • Pensions and Retirement Benefits • ERISA - qualified benefits needed for support;
  • $475 per item in any household goods up to a total of $9,850;
  • Health Aids;
  • Jewelry to $1,225;
  • Lost earnings payments;
  • Motor vehicle to $2,950;
  • Personal injury compensation payments to $18,450;
  • Wrongful death payments;
  • Crime victims' compensation;
  • Public assistance;
  • Social Security;
  • Unemployment compensation;
  • Veterans' benefits;
  • Tools of trade - books and equipment to $1,850;
  • Wild Card • $925 of any property plus up to $9,250 of any amount of unused homestead exemption.



BANKRUPTCY CODE EXEMPTIONS FOR NJ RESIDENTS

New Jersey residents and other who are eligible to file a bankruptcy petition in New Jersey get to keep property up to the certain dollar limit. Any property above the limits belongs to the trustee to sell or to abandon back to the debtors. (A debtor is a person who files a bankruptcy case).The purpose of this law is to help people get a fresh start in life. Many of our firm’s clients find that they get to keep most, if not all of their belongings. Often, individuals and couples are able to keep their homes, cars and pension savings.

Because some states such as Maryland and New York have opted out of the federal list of exempt property it is important to work with a lawyer who regularly practices in a bankruptcy court in your state. Since our firm handles cases in New Jersey only, please speak with an experienced bankruptcy attorney in the state where you live.

A bankruptcy trustee can and will object to improperly claimed exemptions. The trustee has a duty under the law to look at the list of property claimed to be exempt, to ask the debtors questions about their property and how they determined the value of the property in question. The trustee has thirty days from the date of the First Meeting of Creditors to file an objection to an exemption with the Bankruptcy Court. Such an objection is filed, the debtor may respond. The Court will hold a hearing and decide of the exemption was properly claimed.

The value of exempt property is the same for each person who files a bankruptcy case. Therefore, a husband and wife each get an exemption. These means the dollar amounts of property values are doubled for married couples. The amounts of the federal exemptions increase to keep up with inflation. Laws change almost daily. Again, this is a reason why it is important to speak with an attorney who handles many bankruptcy cases for consumers in the state where you live.

The federal exemptions available to New Jersey Bankruptcy filers are:

HOMES

(1) The debtor’s aggregate interest, not to exceed $18,450 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.

CARS AND TRUCKS

(2) The debtor’s interest, not to exceed $2,950 in value, in one motor vehicle.

HOUSEHOLD ITEMS, FURNITURE, APPLIANCES, CLOTHING, TOYS, BOOKS HOBBY EQUIPMENT AND OTHER PROPERTY

(3) The debtor’s interest,$9,850.00 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.

JEWELRY

(4) The debtor’s aggregate interest, not to exceed $1,225 in value, in jewelry held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.

OTHER PROPERTY THE "WILD CARD" EXEMPTION

(5) The debtor’s aggregate interest in any property, not to exceed in value $975 plus up to $9,250 of any unused amount of the exemption provided under paragraph (1) of this subsection.

TOOLS OF THE TRADE AND THE THINGS YOU USE TO EARN A LIVING

(6) The debtor’s aggregate interest, not to exceed $1,850 in value, in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor.

LIFE INSURANCE

(7) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.
(8) The debtor’s aggregate interest, not to exceed in value $9850 less any amount of property of the estate transferred in the manner specified in section 542 (d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.

GLASSES,HEARING AIDS AND OTHER ITEMS NEEDED FOR HEALTHY LIVING

(9) Professionally prescribed health aids for the debtor or a dependent of the debtor.

PAYMENTS AND PENSION SAVINGS

(10) The debtor’s right to receive—
(A) a social security benefit, unemployment compensation, or a local public assistance benefit;
(B) a veterans’ benefit;
(C) a disability, illness, or unemployment benefit;
(D) alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(E) a payment under a stock bonus, pension, profit sharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless—
(i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor’s rights under such plan or contract arose;
(ii) such payment is on account of age or length of service; and
(iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.

PAYMENTS FOR GETTING INJURED

(11) The debtor’s right to receive, or property that is traceable to—
(A) an award under a crime victim’s reparation law;
(B) a payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(C) a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual’s death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;

PERSONAL INJURY SETTLEMENTS AND JURY AWARDS

(D) a payment, not to exceed $18,450, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or

PAYMENTS FOR LOSS OF FUTURE EARNINGS

(E) a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.