If you file for Chapter 7 bankruptcy in New Jersey, you can protect some or all of your property with New Jersey’s bankruptcy exemptions. The bankruptcy exemptions in New Jersey also play a role in Chapter 13 bankruptcy. Read on to learn about what property is covered by New Jersey’s bankruptcy exemptions.
For a general overview of bankruptcy exemptions, visit the Bankruptcy Exemptions topic page.
New Jersey Allows Debtors to Choose Between State and Federal Exemptions
New Jersey is one of the few states that allow debtors to choose between state and federal bankruptcy exemptions. This means that bankruptcy filers may examine both sets of exemptions and elect the exemptions that better protect their assets.
Common New Jersey Exemptions
Here are some of the most common exemptions available under New Jersey law:
Cemeteries and Burial Funds
All cemetery property is 100% exempt. In addition, lands held for burial purposes by a cemetery company, charitable religious or fraternal organization and the trust funds and securities and income of any cemetery property are 100% exempt. N.J. Stat. Ann. §§ 8A:5-9, 8A:5-10, 8A:5-11.
Civil Defense Workers
Disability, death, medical, and hospital benefits for civil defense workers are 100% exempt. N.J. Stat. Ann. § 43:14A-53.
Crime Victims’ Compensation
A debtor’s crime victims’ compensation is 100% exempt, but does not include expenses resulting from the injury that is the basis for the claim. N.J. Stat. Ann. § 52:4B-18.
Homestead or Residential Property
New Jersey does not have a homestead exemption. However, the survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of the other spouse.
For more details about how to protect your homestead or residential property in New Jersey, see The New Jersey Homestead Exemption.
A debtor may exempt the following insurance benefits:
- Life insurance proceeds are exempt if a clause in the insurance policy prohibits proceeds from being used to pay the beneficiary’s creditors. Life insurance proceeds in favor of a person other than the insured are exempt from both the debts of the insured and the beneficiary.
- Up to $500 a month in annuity benefits, unless the annuity was fraudulently obtained.
- Proceeds of health insurance, disability provisions in life insurance contracts, and other disability benefits are exempt. This exemption does not include claims for necessities contracted for during the period of disability.
- Proceeds of group life and group health insurance are exempt. This does not include claims for necessities contracted for during a period of disability.
N.J. Stat. Ann. §§ 17:18-12, 17B:24-6, 17B:24-7, 17B:24-8, 17B:24-9.
New Jersey does not have a specific motor vehicle exemption. You may, however, exempt up to $1,000 in equity in your car or other vehicle by using the general personal property exemption.
To learn more about exempting equity in your car in New Jersey Motor, see The New Jersey Motor Vehicle Exemption in Bankruptcy.
Pension and Retirement Benefits
Public employees’ pensions are 100% exempt. N.J. Stat. Ann. § 43:15A-53.
You may exempt the following personal property:
- clothing is 100% exempt
- up to $1,000 in household goods and furnishings
- up to $1,000 in any personal property, and
- pay and benefits owed to debtor for participating in the state militia.
N.J. Stat. Ann. §§ 2A:17-19, 2A:26-4, 38A:4-8.
Old age assistance is 100% exempt. N.J. Stat. Ann. § 44:7-35.
Tenancy by the Entirety
Tenancy by the entirety is not exempt, but is subject to rights of the non-debtor spouse. See King v. Greene, 30 N.J. 395, 153 A.3d 49 (1959).
Unemployment compensation is 100% exempt. N.J. Stat. Ann. §§ 43:21-15, 43:21-53.
Workers’ compensation is 100% exempt. N.J. Stat. Ann. § 34:15-29.
Confirming the Status of New Jersey’s Bankruptcy Exemptions
New Jersey’s exemption amounts are adjusted periodically. To make sure you have the most recent figures, be sure to check for any updates at the official website of the New Jersey Legislature at www.njleg.state.nj.us.
For more information on how to research and find the latest exemption amounts, see our Legal Research Center.