New Jersey Bankruptcy Laws

Bankruptcy is the formal removal of debt. New Jersey has one bankruptcy court that serves the entire state: the New Jersey Bankruptcy Court. New Jersey bankruptcy provides troubled debtors with a fresh start because bankruptcy protects consumers against lawsuit from creditors. Most people in New Jersey file under chapter 7 or chapter 13. Chap 11 BK is normally only used by businesses and a few individual debtors with very large debts. It's too complicated and expensive for it to be worthwhile to the typical debtor.

New Jersey Bankruptcy Exemptions
Exemptions refer to property you can keep under chapter 7 bankruptcy. According to Lawyers.com, in New Jersey, you can choose from federal exemptions or New Jersey state exemptions. Under federal bankruptcy laws, you can keep:

• Your home, including co-op or mobile home, to $20,200
• Life insurance payments for person you depended on, needed for support
• Life insurance policy with loan value, in accrued dividends or interest to $10,775
• Unmatured life insurance contract, except credit insurance policy
• Alimony, child support needed for support
• Pensions and Retirement Benefits, ERISA - qualified benefits needed for support
• $525 per item in any household goods up to a total of $10,775
• Health Aids
• Jewelry to $1,350
• Lost earnings payments
• Your motor vehicle to $3,225
• Personal injury compensation payments to $20,200, wrongful death payments, crime victims' compensation, public assistance, social security, unemployment compensation, and veterans' benefits
• Tools of trade up to $20,200
• Wild Card - $1,075 of any property plus up to $10,125 of any amount of unused homestead exemption

Married couples may double the amount of the federal exemptions.

If you choose the exemption scheme under New Jersey bankruptcy laws, you can generally keep:

• Goods and chattels, shares of stock or interest in any corporation, up to $1,000 in value
• Clothing
• Household goods and furniture, up to $1,000 in value
• Burial plots
• ERISA-qualified pension benefits
• Public employees' pensions
• Crime victims' compensation, aid to the aged and/or disabled, workers' compensation and unemployment compensation
• Property of a business partnership
• Annuity contract proceeds, up to $500 per month
• Fraternal benefit society and health or disability benefits
• Disability or death benefits for military personnel
• Disability, death, medical or hospital benefits for civil defense workers
• Groups life or health policy proceeds
• Life insurance proceeds if a clause in the policy prohibits the proceeds from being used to pay the beneficiary's creditors
• Life insurance proceeds or avails if you are not the insured
• 90% of earned but unpaid wages if your income is less than $7,500 per year; if your income is over $7,500 per year, the judge will decide how much of your wages to exempt
• Wages or allowances received by military personnel

NOTE: These are the major bankruptcy exemptions. Check with your bankruptcy lawyer for a full exemptions list.

New Bankruptcy Law Changes - Outlines major changes you should know about in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), also known as the new bankruptcy laws.

This is important! The new bankruptcy law requires all debtors to fulfill two education requirements: a credit counseling course prior to filing and a financial management course before obtaining a discharge. Failure to complete either of these courses and file the appropriate certificates with the court will prevent a successful bankruptcy. The Chapter 13 Trustee will offer the required courses to Chapter 13 debtors, but Chapter 7 debtors are required to take the courses on their own.

Find a U.S. Trustee Approved Pre-Bankruptcy Counseling Provider and Post-Filing Debtor Education Provider.