When you seek to permanently discharge debts in a Chapter 7 bankruptcy filing, part of the deal is that you get to claim some property as exempt, so that it can’t be taken by the bankruptcy trustee and sold to satisfy your creditors. The exemption customarily identifies how much equity can be protected in your home, as well as how much personal property can be kept. Each state has its own schedule of exemptions or you can choose the federal exemption.
The Homestead Exemption in New Jersey
Unlike many other states, New Jersey does not have a homestead exemption for people seeking bankruptcy protection under Chapter 7. Accordingly, if you want to protect any of the equity in your home during a Chapter 7 proceeding, you must choose the federal exemption.
That’s not to say, however, that a homeowner cannot protect any interest in a homestead in New Jersey, but it’s a fairly complicated legal process to do so. Under New Jersey law, a married debtor can claim an exemption for any survivorship interest in property, provided the property is held “by the entirety” with his or her spouse. “By the entirety” is a legal term that refers to a specific type of property ownership, where the parties are not allowed to sell or transfer their individual interest without permission from the other parties.
You can, of course, choose the federal exemptions, but you must use the federal exemptions for all your property (you can opt for the New Jersey exemption on some and the federal for other property). Currently, the federal homestead exemption amount is $22,975, but it is subject to change every three years. You can use the federal homestead exemption for a wide range of real property, including homes, co-ops, condominiums, mobile homes and even burial plots.
Contact Neuner & Ventura, LLP
At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
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