Bankruptcy Exemptions

The following is intended only to provide you with basic information about personal bankruptcy.  Bankruptcy issues are quite complex and individual questions should be answered only by a experienced bankruptcy attorney who could assess your personal needs. This following is not a substitute for personal  legal advice regarding your individual needs and circumstances.

In New Jersey, you are entitled to use exemptions provided under federal law. An exemption simply allows you to protect certain of your personal belongings in the bankruptcy process, depending upon what they are and what their value is.

The most common of these exemptions are as follows (Effective April 1, 2010) :
Your house: You are allowed to protect the equity in your home up to $21,625.00. If you are a married couple filing personal bankruptcy, this amount may be doubled and can be applied to the home you own together. Therefore, if after deducting the balances due on your mortgages from the fair market value of you home you can cover the remaining equity with your exemptions, it may be possible to keep your home even in a chapter 7

Your car: You are allowed to protect the value of your car up to $3,450.00. Typically, if you deduct any loan balance from the value of your car and you can cover the remaining amount with your exemptions, it may be possible to keep your car.

Your jewelry: You can protect jewelry having value of $1,450.00.

Things around the house: You may be able to protect up to $550.00 in value for each household item such as furniture and appliances, as well as your clothing, as long as the total value of all such personal items does not exceed $11,525.00.

Your retirement: It may be possible for you to protect your entire pension, which include 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans including IRAs. For IRAs and Roth IRAs, however, you may be limited to $1,171,650.00.

If you have been in a accident: Your right to receive compensation for your injuries may be considered an asset. Federal law may allow you an exemption of $20,000.00 to cover your claim for personal injury, and in addition, may completely exempt that part of your claim which would serve to compensate you for loss of future income to the extent it is necessary for the support of you and your family. (A claim for workers compensation may likewise be completely exempt without regard to a specific dollar limit).

Everything else: Federal law provides you with a “wildcard exemption” of up to $11,975.00 that you can apply to everything else, such as cash in the bank or any value that the other exemptions don’t quite cover. For example, if the $3,450.00 exemption allowed to protect your car does not quite cover its value, then you can use the wildcard exemption to protect it.  Simply stated, if you don’t have a house, you would have a wildcard exemption allowing you to protect $11,975.00 worth of “everything else.” The same would hold true if you owned a house that has no equity.

If you do own a home with equity, you would have to deduct any exemption used to protect your home to the extent it exceeds $10,800.00. If you have used more than $10,800.00 in exemptions to protect your home, then the allowable wild card exemption would be reduced by that amount.  Contact our Bergen County bankruptcy lawyers today.

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