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.
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 has no state bankruptcy exemptions. Filers must use the federal exemption system under 11 U.S.C. section 522(d). This is unusual -- most states have their own exemptions.
Protects up to $27,900 of equity in your primary residence ($55,800 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 $4,450 of equity in one motor vehicle. You can supplement this with the wildcard exemption.
11 U.S.C. 522(d)(2)
You get $1,475 to apply to any property. Plus, you can add up to $13,950 of unused homestead exemption. If you do not own a home, your total wildcard can be up to $15,425 -- which can protect bank accounts, tax refunds, or other valuable assets.
11 U.S.C. 522(d)(5)
| Property | Amount | Statute |
|---|---|---|
| Household goods, furnishings | $700 per item / $14,875 total | 522(d)(3) |
| Jewelry | $1,875 | 522(d)(4) |
| Tools of trade | $2,800 | 522(d)(6) |
| Life insurance (cash value) | $14,875 | 522(d)(8) |
| Health aids | Unlimited | 522(d)(9) |
| Retirement accounts (IRA/401k) | Unlimited (ERISA) / $1,512,350 (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 has not enacted its own bankruptcy exemptions. Filers must use the federal exemption system, which includes a $27,900 homestead exemption.
The federal vehicle exemption is $4,450. 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.