The U.S. Bankruptcy Code allows New Jersey residents to exempt some of their assets from liquidation. If you file for Chapter 7, the court may require you to sell valuable property to repay outstanding debts. An exemption, however, could allow you to keep some of your property.
As noted by Bankrate.com, you may use either the federal or New Jersey exemption limits when preparing your petition. You may choose to file under the guidelines that offer you greater protection.
Which assets may I protect with federal exemptions?
Federal exemptions allow protecting a residence, vehicle and necessary goods. You may keep your primary home by applying for a homestead exemption. Based on its equity value, you may keep your property if it does not exceed the current homestead limit.
A lender may not repossess a vehicle needed for work. The court currently allows filers to keep vehicles with equity value under $4,000. You may also protect your work tools valued at less than $2,525. Other items such as musical instruments and appliances, however, may not exceed $625 per item or an aggregate worth of $13,400.
How may I keep my assets with the “wildcard” exemption?
Instead of relying on federal exemptions, New Jersey residents may choose to use the Bankruptcy Code’s wildcard exemption. With a wildcard exemption, you may choose any asset to protect from liquidation. Under the current limits, as long as an asset’s value does not exceed $1,325, you may keep it in addition to $12,575 worth of your home’s equity.
Bankruptcy may provide a way to move forward after facing overwhelming debts or a loss of income. You could also keep some of the property that you need by claiming a New Jersey or federal exemption. Discharging your unsecured debt through a Chapter 7 filing may provide a workable option for a fresh start.