Exemptions determine what property you get to keep when you file bankruptcy. Understanding them is critical - they can mean the difference between keeping and losing your home, car, and savings.
New Jersey filers can choose the federal exemption system under 11 U.S.C. section 522(d) or New Jersey's own, limited state exemptions; most choose federal because New Jersey has no state homestead exemption. The federal homestead exemption is $31,575, the vehicle exemption is $5,025, and the wildcard is $1,675 plus up to $15,800 of unused homestead.
Bankruptcy exemptions are laws that protect certain property from being taken to pay your creditors. In Chapter 7, non-exempt property can be sold by the trustee. In Chapter 13, the value of non-exempt property affects how much you must pay through your plan.
New Jersey filers can choose federal or state bankruptcy exemptions. New Jersey's own exemptions are limited (there is no state homestead exemption), so most filers use the federal system under 11 U.S.C. section 522(d).
Protects up to $31,575 of equity in your primary residence ($63,150 for married couples filing jointly). Equity is your home's value minus what you owe on the mortgage.
11 U.S.C. 522(d)(1)
Protects up to $5,025 of equity in one motor vehicle. You can supplement this with the wildcard exemption.
11 U.S.C. 522(d)(2)
You get $1,675 to apply to any property. Plus, you can add up to $15,800 of unused homestead exemption. If you do not own a home, your total wildcard can be up to $17,475 - which can protect bank accounts, tax refunds, or other valuable assets.
11 U.S.C. 522(d)(5)
| Property | Amount | Statute |
|---|---|---|
| Household goods, furnishings | $800 per item / $16,850 total | 522(d)(3) |
| Jewelry | $2,125 | 522(d)(4) |
| Tools of trade | $3,175 | 522(d)(6) |
| Life insurance (cash value) | $16,850 | 522(d)(8) |
| Health aids | Unlimited | 522(d)(9) |
| Retirement accounts (IRA/401k) | Unlimited (ERISA) / $1,711,975 (IRA) | 522(b)(3)(C) |
| Social Security benefits | Unlimited | 42 U.S.C. 407 |
| Unemployment benefits | Unlimited | 522(d)(10) |
| Alimony/child support | Unlimited | 522(d)(10) |
New Jersey's own bankruptcy exemptions are limited (there is no state homestead exemption), so most filers use the federal exemption system, which includes a $31,575 homestead exemption.
The federal vehicle exemption is $5,025. You can supplement this with the wildcard exemption.
Yes. ERISA-qualified retirement accounts (401k, pension) are generally fully exempt in bankruptcy. IRAs are protected up to federal limits.
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