What exemptions can you claim in a New Jersey bankruptcy?

On Behalf of | Jun 11, 2025 | Bankruptcy |

Realizing that you don’t have enough money to pay your basic bills while keeping up with making payments on other debts can be a difficult situation. Recognizing that there’s no way to move past the financial difficulties may lead some individuals to decide they need to take action. 

One option is to file for bankruptcy, which is a legal way to get control of your finances. Doing this may come with a lot of questions, one of which is how filing may impact the individual’s assets. 

What happens to assets in bankruptcy?

Bankruptcy sometimes requires that creditors receive payments to satisfy all or part of the debt. In a Chapter 7 bankruptcy, this is done by liquidating assets. But that doesn’t automatically mean that all assets will be liquidated. Instead, there are some assets that are exempt from the bankruptcy process. 

Bankruptcy filers in New Jersey can choose between federal or state exemptions, but they can’t pick and choose from both. Most people find federal exemptions more favorable. 

  • Homestead exemption: $25,150 for a federal exemption, but none for a state exemption
  • Personal property exemption: $18,000 for a federal exemption, but $1,000 for a state exemption
  • Motor vehicle exemption: $4,000 of equity for a federal exemption, but none for state
  • Wildcard exemption: $1,325 for certain nonexempt property, plus up to $12,575 of unused homestead exemption for a federal exemption, but $1,000 for a state exemption

Both federal and state exemptions allow for certain unlimited public benefits. These include Social Security benefits and unemployment compensation. Certain retirement accounts are exempt under federal exemptions for up to $1.3 million. 

It’s up to the trustee to determine if a person has enough assets to warrant the expense of the liquidation process. In some cases, the trustee may determine that there’s not enough to seize and liquidate anything, even if the assets aren’t exempt from the process. If you’re considering filing for bankruptcy, it might be best for you to work with someone who can walk through the process with you and help you determine how filing may impact you.