Bankruptcy Exemptions

 

New Jersey permits either 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 under the exemptions that are available under the Federal Law.

 

Federal Exemptions

 
   

Asset

Exemption

Subsection of 11 USC § 522

Homestead

Real property, mobile home, co-op, or burial plot: up to $20,200. Up to $10,125 of this amount may be used as a wildcard and applied to any kind of property.

(d)(1); (d)(5)

Insurance

Life insurance contract (not matured): all except credit insurance policies.

(d)(7)

 

Life insurance policy loan value and accrued dividends: up to $10, 755.

(d)(8)

 

Unemployment, disability, and illness benefits: all.

(d)(10)(C)

 

Life insurance payments from a policy taken out on someone the debtor depended on: all necessary for support.

(d)(11)C)

Miscellaneous

Child support and alimony: all necessary for support.

(d)(10)(D)

Pensions

Tax exempt retirement accounts (which include 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans): all.

(b)(3)(C)

 

IRAs and Roth IRAs: up to $1,095,000 per person.

(b)(3)(C)

Personal Property

Motor vehicle: up to $3,225.

(d)(2)

 

Household goods, appliances, furnishings, clothing, books, musical instruments, animals, crops: up to $525 per item and up to $10,775 total.

(d)(3)

 

Jewelry: up to $1,350.

(d)(4)

 

Health aids: all.

(d)(9)

 

Recovery for the wrongful death of a person on whom the debtor depended: all.

(d)(11)(8)

 

Recoveries for personal injury (excluding amounts for pain and suffering and pecuniary loss): up to $20,200.

(d)(11)(D)

 

Payments for lost earnings: all.

(d)(11)(E)

Public Benefits

Public assistance benefits: all.

(d)(10)(A)

 

Social Security benefits: all.

(d)(10)(A)

 

Unemployment compensation benefits: all.

(d)(10)(A)

 

Veterans’ benefits: all.

(d)(10)(A)

 

Crime victim compensation: all.

(d)(11)(A)

Tools of Your Trade

Implements, tools, and books: up to $2,025.

(d)(6)

Wages

No exemption.

 

Wildcards

Any property: up to $1,075.

(d)(5)

 

Any property: up to $10,125 of the unused homestead exemption.

(d)(5)

The bankruptcy system was developed by Congress to benefit the entire country and allow individuals to obtain a fresh start. Chapter 7 bankruptcy is a discharge of all unsecured debt. If you are approved for Chapter 7, your debt will be discharged within three to five months from the time of your filing. You may be able to keep your house and your cars if your payments are current. It is imperative that you receive advise from a competent Bankruptcy Counsel prior to filing your petition because a competent Counsel will assess your situation and advise you if any of your property can be jeopardized by filing for bankruptcy. Chapter 7 is the most common type of Bankruptcy Case.

 

Additionally, Chapter 7 Bankruptcy provides immediate relief by putting an end to:

  • (a) Foreclosure
  • (b) Landlord Tenant Evictions
  • (c) Lawsuits
  • (d) Wage Garnishments
  • (e) IRS Levies
  • (f) DMV Surcharges

What is a Chapter 13 Bankruptcy?

 

Chapter 13 is a reorganization or repayment bankruptcy that allows the debtor to enter into an interest-free debt repayment plan to pay back all or some of the debtor’s debts over a 3 to 5 year period. During this time, creditors must abide by the plan and are not permitted to collect from you or contact you.

 

Chapter 13 Plan:

  • (a) Stops the foreclosure and permits you to repay your mortgage arrearages over a three (3) to five (5) year plan;
  • (b) Pay back amounts owed in alimony and child support through your plan;
  • (c) Discharge your 2ND MORTGAGES where the value of your house is less than what you owe for your first mortgage;
  • (d) Stop eviction and allow you to pay back your landlord arrearages over time;
  • (e) Only pay back the real value of your car where you car is over two and half years old (2 1/2). Any outstanding balances will be discharged;
  • (f) Upon filing Utility companies will be required to immediately restore your services;

Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable for public policy reasons (based either on the nature of the debt or the fact that the debts were incurred due to improper behavior of the debtor, such as the debtor’s drunken driving).

 

There are 19 categories of debt excepted from discharge under chapters 7: A more limited list of exceptions applies to cases under chapter 13.

Generally speaking, the exceptions to discharge apply automatically if the language prescribed by section 523(a) applies. The most common types of non-dischargeable debts are certain types of

 

  • (a) tax claims;
  • (b) Debts for spousal or child support or alimony,
  • (c) Debts for willful and malicious injuries to person or property,
  • (d) Debts to governmental units for fines and penalties,
  • (e) Debts for most government funded or guaranteed educational loans or benefit overpayments,
  • (f) Debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated,
  • (g) Debts owed to certain tax-advantaged retirement plans, and
  • (h) Debts for certain condominium or cooperative housing fees.

For More information, contact New Jersey Bankruptcy Attorneys.