One of the more common questions that those seeking Chapter 7 bankruptcy protection in Hackettstown have is whether o not filing for bankruptcy will force them to forfeit their personal assets. For those facing seemingly insurmountable debts, the appeal of bankruptcy comes from not having to worry about creditors continuing to seek action against them (thus driving them further and further into debt). Yet when faced with the prospect of potentially losing their homes and/or other valuable assets, many might choose to abandon the idea of bankruptcy altogether.
Whether one will be forced to part with any of their personal property in a bankruptcy case depends on the bankruptcy exemptions available to them. The law allows debtors to exempt a certain portion of the equity they have in their property from being seized by creditors. For example, if a person has $12,000 of equity in their home, and the law allows them to exempt up to $15,000, then that means that their home cannot be sold to repay creditors as part of a bankruptcy case. However, if the law only allows them to exempt $10,000, then they will be given that $10,000 by their bankruptcy trustee, and then the house will be sold.
New Jersey law allows bankruptcy filers to decide to elect to use either the state’s bankruptcy exemption guidelines or those established by the federal government. New Jersey has not established a homestead exemption, yet state statutes allow for the following other exemptions:
- $1,000 in personal property ($2,000 for married couples)
- 75 percent of one’s gross earnings
- Blanket exemptions for certain government pensions
Conversely, according to the Cornell Law School, federal exemptions protect up to $23,675 of one’s home equity, $12,675 in aggregate value of one’ss personal property, $3,775 of equity in one’s personal vehicle, and $1.28 million in individual retirement accounts.