Many of my clients ask me if they will lose their property when they file for bankruptcy. In a word, “no.” In almost every case, my clients keep all of their assets while erasing all of their debts.
What You Should Know About Exemptions
Bankruptcy law allows you to keep a certain amount of property during bankruptcy. Property that you get to keep is called “exempt” property. On the other hand, any property that cannot be kept is appropriately called “non-exempt” property.
In New Jersey, people filing bankruptcy may use other federal or state exemptions. Federal exemptions are usually more generous.
The following is a list of exempt and non-exempt property items:
Property That Is Exempt
You may typically keep the following items:
- Cars and motor vehicles, up to #3,775
- Reasonably necessary clothing up to $12,625
- Reasonably necessary household goods and furnishings up to $12,625
- Household appliances up to $12,625
- Jewelry, up to $1,600
- Pension plans for an unlimited amount (as long as the plan is tax exempt)
- Equity in your home up to $23,675
- Any tools used for your trade or profession, up to $2,375
- A portion of unpaid but earned wages
- Public benefits, including public assistance (welfare), social security, and unemployment compensation, accumulated in a bank account
- Damages awarded for personal injury up to $23,675
- A wildcard exemption (covering any property) up to $13,100 depending on the amount of exemption in your home
Property That Is Not Exempt
The only items that are not exempt are those that exceed the amount of allowed exemptions. Unless you own items of unusual value, you can still keep it and pay the non-exempt value in a 5-year Chapter 13 plan.
Filing for bankruptcy can be complicated, but it doesn’t have to be. Contact me to schedule a consultation to learn more about the bankruptcy process.