What is a Bankruptcy Exemption?
Federal Bankruptcy Exemptions vs. State Bankruptcy Exemptions
Congress created bankruptcy exemptions and set the limits for federal bankruptcy exemptions. Each state has a set of state bankruptcy exemptions that debtors may use.
Many states allow debtors in bankruptcy to choose between federal bankruptcy exemptions and state bankruptcy exemptions, including New Jersey and New York. The choice between federal and state exemptions can be important. A New Jersey bankruptcy attorney can evaluate your situation to determine which set of bankruptcy exemptions provide the greatest protection of assets in bankruptcy.
Federal bankruptcy exemptions are adjusted every three years on April 1. The next scheduled change for federal bankruptcy exemptions is on April 1, 2022. As of April 1, 2019, some of the common federal bankruptcy exemptions used by debtors include:
Many items are protected up to their full value, including pensions, most tax-exempt retirement accounts, public assistance, Social Security, unemployment compensation, Veteran’s benefits, and domestic support.
What are the Bankruptcy Exemptions for New Jersey?
New Jersey allows bankruptcy debtors to choose between federal bankruptcy exemptions and state bankruptcy exemptions. The amount allowed for New Jersey state exemptions may also change. The amounts below are current as of August 2019. In contrast to the federal exemptions, NJ bankruptcy exemptions allow:
Most individuals who file bankruptcy in New Jersey opt to use federal bankruptcy exemptions because the federal exemptions provide more protection of assets in bankruptcy.
What are the Bankruptcy Exemptions for New York?
Learn More About Bankruptcy Exemptions from an Experienced New Jersey Bankruptcy Lawyer
Choosing between federal and state bankruptcy exemptions can have a significant impact on your bankruptcy case. You need to choose the exemptions that provide the highest level of protection from creditors and the court. In most cases, a Chapter 7 debtor does not lose any property because the net equity in the debtor’s property falls below the exemption amounts or the equity in the property is of “inconsequential value.” A Chapter 7 trustee may declare that the asset is of inconsequential value when the equity is not enough to justify selling
the asset and administering a Chapter 7 asset case.
If a debtor has property that is not exempt, filing a Chapter 13 case may be an option. In Chapter 13, you can protect non-exempt assets while getting out of debt. The bankruptcy repayment plan allows you to restructure debts. In many cases, debtors only pay a small percentage of their unsecured debt (credit cards, medical bills, etc.) through a Chapter 13 plan.
If you want to explore debt relief options, including Chapter 7 or Chapter 13, contact the Silverberg Law Firm to schedule a free consultation with a bankruptcy attorney in New Jersey. In New Jersey call (201) 252-7000 and in New York call (212) 687-7000.