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New Jersey Bankruptcy Laws
Both federal and state statutes allow those filing Chapter 7 bankruptcy to claim exemptions for certain property, protecting it from liquidation. In New Jersey, clients may claim either federal or state exemptions, but not both. The state exemptions include such items as:
Homestead |
None |
Personal Property |
Clothing, goods, personal property, stock or interest in corporations, up to a total of $1,000; household goods and furniture up to $1,000; burial plots |
Wages |
90% of wages that are earned but unpaid for those whose annual income is less than 250% of the federal poverty level; for higher incomes, 75% |
Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; civil defense workers; teachers and school district employees; legal trusts; judges; prison employees, public, municipal, county, and city employees; city workers’ ERISA-qualified benefits; police; firefighters; traffic officers; state police |
Public Benefits |
Worker’s comp; unemployment; old age, permanent disability assistance |
Insurance |
Civil defense workers’ disability, death, medical, or hospital benefits; health and disability benefits; some forms of life insurance benefits; group life or health policies or proceeds; military disability or death benefits |
Filing a bankruptcy petition entails more than just presenting the financial case of a debtor.
- Before they can even file, the debtor must complete credit counseling.
- Once the petition is filed, the court appoints a bankruptcy trustee to analyze and oversee the petition.
- The trustee holds a 341 meeting, named for that section in the bankruptcy code, with the debtor, their attorney, and any creditors who wish to attend. The debtor is required to answer questions about their financial status under oath.
- The trustee determines if any property should be liquidated.
- If the bankruptcy petition is approved, the client must complete government approved debt education before their debts can be discharged.
- Most of the Chapter 7 client’s unsecured debt is discharged. The debtor may be required to continue payments on their secured debt if they want to avoid repossession or foreclosure by the lien holder(s).
- The Chapter 13 client must appear before the judge to have their repayment plan approved. They abide by the plan, and at the end of the repayment period, any remaining debts may also be discharged.
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