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Monday, August 17, 2020

What Personal Property is Exempt in Chapter 7 Bankruptcy?

There are many misconceptions about bankruptcy and the consequences of filing for bankruptcy. Bankruptcy can provide substantial financial relief to those who are struggling to keep up with minimum debt payments and experiencing financial difficulty. Chapter 7 bankruptcy is one of the most common forms of personal bankruptcy filed. Sometimes people avoid looking into bankruptcy as an option because they fear losing all of their assets. In New Jersey, you will not lose all of your assets due to filing bankruptcy. For instance, you may take advantage of personal property exemptions that protect property in the event that you file bankruptcy.

What Personal Property is Exempt in Chapter 7 Bankruptcy?

In New Jersey, if you file Chapter 7 bankruptcy, you are able to take advantage of certain exemptions that act to protect property from being sold off to satisfy your creditors. Your exempt property is kept separate from your bankruptcy estate. When you file for Chapter 7 bankruptcy in New Jersey, you are given the option of choosing between the federal bankruptcy exemptions and those provided pursuant to New Jersey state statutes.

You must choose between one or the other as far as which set of exemptions you wish to use. You cannot select piecemeal from each list. To determine which set of exemptions you wish to apply to your bankruptcy filing, make a list of your property along with the property value. Look at what property you would be able to exempt under each set of exemptions and see which works out best for you.

Some of the more common personal property exemptions in the New Jersey set of exemptions include:

  • Wildcard exemption protecting up to $1,000 in personal property
  • Clothing
  • Stocks and other interest in corporations
  • Household goods and furniture up to $1,000
  • Burial plots

If you are married filing jointly, then the amount allowed for exemptions is doubled. If the exemption amount does not cover the full value of the property, then it may be subject to sale and you would get the exempt amount returned to you in cash. You will note that there are some glaring things missing from this exemption list. In New Jersey exemptions, there is no homestead exemption and no motor vehicle exemption. There is also no exemption for tools of the trade.

If you have a significant amount of equity in your home or a vehicle, you will definitely want to make sure that the federal exemptions are the best option for you. The federal exemptions provide homestead exemption as well as a motor vehicle exemption up to $4,000. You can also exempt:

  • Clothing, furnishings, household goods up to $625 per item and up to $13,400 total
  • Jewelry up to $1,700
  • Health aids

Like the New Jersey exemptions, if you are married filing jointly, the exemption amounts will double.

New Jersey Bankruptcy Attorneys

These are difficult financial times for many. If you find yourself unable to keep up with your financial obligations, Chapter 7 bankruptcy may provide you with much-needed relief and the chance at a fresh financial future. The Cassidy Law Firm is here to help. Contact us today.

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