Federal Exemptions in a Chapter 7 Bankruptcy
If you’ve been struggling to meet your financial obligations, whether because of injury or illness, divorce or any other reason, one of the ways you can get a fresh start is by filing a Chapter 7 bankruptcy petition. With a Chapter 7, you can permanently rid yourself of certain debt (student loans, tax obligations and child support/family law arrearages usually don’t qualify) in exchange for the sale of some of your assets. Many states have their own schedule of exemptions and there’s also a federal schedule. In New Jersey, as in nearly half of all states, you can choose whether you want to claim the state or federal exemptions, but you can mix and match between the two. Contact a New Jersey bankruptcy attorney for help with your Chapter 7 bankruptcy case.
The Federal Bankruptcy Exemptions
The federal exemptions are adjusted every three years and were last modified in 2016. Under current law, the following exemptions apply:
- The homestead exemption — Under federal law, you can claim up to $23,675 in the equity in your home. The exemption covers many types of real estate, including condos, co-ops and even burial plots, but you must actually live in the dwelling to claim the homestead exemption.
- Personal property exemption — There are a number of specific personal property exemptions under the federal schedule, including:
- $1,600 for any jewelry
- $2,375 for tools of your occupation or trade, including books
- $3,775 for any equity in your motor vehicle
- $12,625 for loan value, dividends or interest in a life insurance policy
- $12,625 for household goods, including books, animals, appliances and musical instruments
- Personal injury settlements or verdicts — You can keep up to $23,675 in the value of any settlement or verdict
- Retirement accounts – All retirement accounts are typically exempt, though there’s a cap of $1,283,025 on IRAs.
Contact Neuner & Ventura, LLP
At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. For an appointment, call a bankruptcy lawyer at our office 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 bankruptcy attorney. Evening and weekend appointments are available upon request.
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