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Federal Bankruptcy Exemptions available to New Jersey Debtors

Posted by Kridel Law Group | Jun 03, 2020 | 0 Comments

If you plan to initiate bankruptcy proceedings in New Jersey, it is important to understand which of your assets are exempted, or “safe,” from sale to pay your creditors under Chapter 7 bankruptcy proceedings, or how much money each creditor will receive from your payment plan under a Chapter 13 structure. Both New Jersey State and Federal exemptions created by Congress are allowed under the Bankruptcy Code, though debtors are required to select one system.


The purpose of the federal exemption system is to allow debtors to retain certain property that they need, are entitled to, or especially value, even though they are filing bankruptcy. In other words, the law recognizes that simply because a debtor is seeking relief or restructuring, it would be unfair—and unhelpful—to expect them to give up all of their property.

As of the date of this post, the exemptions allowed by the federal system include:

  • Homestead: Up to $23,675 to cover your home, trailer or mobile home;
  • Motor vehicle: Up to $3,775 for one vehicle;
  • Personal property: Up to $12,625 for personal property items including household goods and appliances, furniture, books, clothing, pets, and musical instruments. Items cannot be valued at more than $600 each;
  • Jewelry valued at up to $1,600;
  • Health aids and necessary medical equipment and devices;
  • Wrongful death awards, if you relied upon the decedent for support, to the extent reasonably necessary for the support of you and your dependents;
  • Other types of personal injury awards up to $23,675, so long as the award is not for financial loss, or for pain and suffering damages;
  • Payments for lost wages;
  • Pensions and other retirement accounts, including 401(k)s;
  • IRAs valued up to $1,283,025;
  • Public benefits, such as Social Security, unemployment benefits, veterans' aid, and public assistance;
  • Crime victim's compensation;
  • Tools of a trade or profession, including books, implements, and equipment up to $2,375;
  • Alimony and child support, to the extent that it is reasonably necessary for you and your dependents;
  • Insurance benefits, including life insurance up to $12,625, long- and short-term disability, illness, and unemployment;
  • Wildcard: Up to $1,250 for any type of personal property, plus up to $11,850 of any unused amount of the homestead exemption.

Note that the above exemption amounts are for one individual debtor; should you choose to file jointly with your spouse, each exemption would double.


Your experienced New Jersey bankruptcy attorney can review the exemptions available under the Bankruptcy Code with you so that you can determine which exemption system—Federal or State—offers the most value for your specific circumstances. Reach out to us today at the Kridel Law Group for assistance with your case.  

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