Taking Advantage of New Jersey’s Generous Bankruptcy Exemptions

How Soon Can You Take Advantage of New Jersey’s Bankruptcy Exemptions?

When individuals file for protection under Chapter 7 of the federal bankruptcy laws, they are entitled to claim some of their property as exempt from the claims of unsecured creditors or from sale in the bankruptcy. Normally, the bankruptcy exemptions or state law exemptions available in the state of current residence are the ones that apply. But for people who have moved from one state to another in the past 2 years, this may not be the case. Determining exactly what exemptions are available is a major consideration for those seeking a fresh start in bankruptcy. Some states, like New Jersey and Pennsylvania, have kept the fairly liberal federal bankruptcy exemptions. But others have “opted out” and set up their own bankruptcy exemptions. This can be a problem if you did not have your current state of residence as your domicile for all of the 2 years before filing bankruptcy. If that is true, then the exemptions that will not necessarily the ones that apply in the state where you now live. Instead, the exemptions that will often apply are those for the state where you were domiciled for most of the period from 2 and 2 ½ years before filing. Some states impose residency requirements for bankruptcy exemptions, and if these would their use by someone who has moved out of state, the federal exemptions will still apply. Just be aware of this issue if you have moved. Applying this rule is tricky and needs careful analysis by an experienced bankruptcy lawyer.

Individuals filing for bankruptcy can also choose the applicable state’s “non-bankruptcy” exemptions which determine outside of bankruptcy what people with judgments against them can protect from a Sheriff levy. In New Jersey and Pennsylvania, most people choose the bankruptcy exemptions which are far more libieral than the state law exemptions. But in some special cases there may be a good reason to opt for state law such as where the non-bankruptcy protection of a particular asset such as a home ore life insurance cash value is significantly better. This option, however, applies across the board. You have to pick either the bankruptcy or non-bankruptcy exemption system for all your property. You are not permitted to “pick and choose”.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. We do, however, reserve the right to charge a fee to review any work done by another attorney.

For an appointment, call Neuner & Ventura at (856) 596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.

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