{"id":286864,"date":"2021-04-14T10:35:48","date_gmt":"2021-04-14T15:35:48","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/bankruptcy\/bankruptcy-laws-by-state\/new-jersey-bankruptcy-exemptions-and-law.html"},"modified":"2026-09-08T16:11:41","modified_gmt":"2026-09-08T21:11:41","slug":"new-jersey-bankruptcy-exemptions-and-law","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/new-jersey-law\/new-jersey-bankruptcy-exemptions-and-law.html","title":{"rendered":"New Jersey Bankruptcy Exemptions and Law"},"content":{"rendered":"\n
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New Jersey Bankruptcy Exemptions and Law<\/h1>\n\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

New Jersey<\/span> residents can eliminate or reorganize their overwhelming debt under federal law<\/span>. Debtors primarily file Chapter<\/span> 7 liquidation<\/span> to discharge unsecured liabilities or Chapter 13 to create a structured repayment plan<\/span>. To qualify, individuals must pass an income means test<\/span>, undergo credit counseling<\/span>, and submit tax filings. Filers can protect assets by choosing either limited state exemptions<\/span> or broader federal exemptions<\/span>.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n

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There are several types of bankruptcy<\/span>, with the two most common being Chapter 7 and Chapter 13. Most bankruptcy attorneys call Chapter 7 a\u00a0liquidation<\/span>\u00a0bankruptcy, while Chapter 13 is\u00a0a reorganization bankruptcy.<\/p>\n

In a Chapter 7 <\/span>bankruptcy<\/span> case<\/span><\/a>, the debtor petitions the court to discharge unsecured debts<\/span>, such as credit card<\/span> or medical debt. If the person meets the\u00a0eligibility<\/span>\u00a0requirements for Chapter 7, the court will likely approve the\u00a0bankruptcy petition<\/span>\u00a0and, ultimately, discharge the debts. For a Chapter 13 <\/span>bankruptcy<\/span> case<\/span><\/a>, the individual asks the court to discharge eligible unsecured debts<\/span> after completing a payment plan<\/span>.<\/p>\n

This article explains how the bankruptcy laws<\/span> work in New Jersey<\/span>. It also examines the bankruptcy <\/span>exemptions<\/span> in the Garden State and whether you can claim them in your bankruptcy case<\/span>.<\/p>\n

If you\u2019re considering bankruptcy or have already filed your petition, consider speaking with a New Jersey<\/span> bankruptcy<\/span> attorney<\/span><\/a>. Not only will they ensure that you file your petition properly, but they\u2019ll also make sure your bankruptcy trustee<\/span> treats you fairly.<\/p>\n

New Jersey<\/span> Bankruptcy<\/span> Law<\/span><\/h2>\n

For the most part, New Jersey<\/span>\u2019s <\/span>bankruptcy<\/span> laws<\/span> mirror those of the federal government. To qualify for a Chapter 7 bankruptcy<\/span> in New Jersey<\/span>, you must demonstrate that your income is less than the state\u2019s average median income<\/span> for your household size. Otherwise, a \u201cMeans Test<\/span><\/a>\u201d will determine if you have insufficient disposable income<\/span>.<\/p>\n

New Jersey<\/span>\u2019s Chapter 13 eligibility<\/span> requirements are the same as they are in most other states. As long as your debts fall under the federal limits and you can prove that you have a regular income, you may qualify to file a Chapter 13 <\/span>bankruptcy<\/span> petition<\/span>.<\/p>\n

One major departure from the federal bankruptcy laws<\/span> is the amount of money a debtor can claim as an exemption<\/span>. When a person files for bankruptcy, they can claim certain exemptions<\/span>. These exemptions<\/span> protect you from the sale of your assets in a Chapter 7 and help lower your monthly payment amounts in a Chapter 13. Understanding the available exemption<\/span> amounts helps you decide whether to use\u00a0New Jersey<\/span>\u2019s exemptions<\/span>\u00a0or those offered by the federal government.<\/p>\n

General Requirements for Filing Bankruptcy<\/span><\/h2>\n

In addition to meeting the above criteria, there are other eligibility<\/span> requirements. Before you file your bankruptcy petition<\/span>, you must complete a mandatory credit counseling<\/span> course. A copy of your certificate of completion must be attached to your petition.<\/p>\n

You must also have filed your state and federal tax returns<\/span> for the most recent year you file for bankruptcy. Your bankruptcy attorney must include a copy of these returns when they file your petition. Filing for bankruptcy can provide you with debt relief<\/span>, but you must decide which chapter to file and complete the bankruptcy process<\/span> before the court will discharge your debts under Chapter 7 or approve your Chapter 13 repayment plan<\/span>.<\/p>\n

New Jersey<\/span> Bankruptcy<\/span> Exemptions<\/span><\/h2>\n

Every state offers bankruptcy filers exemptions<\/span> that they can use to protect their property when they file. These exemptions<\/span> prevent the trustee from seizing your property, selling it, and distributing the proceeds to your creditors.<\/p>\n

The United States Bankruptcy Code<\/span> also offers people personal <\/span>bankruptcy<\/span> exemptions<\/span>. Some federal exemptions<\/span> are greater than those offered by the state. In other cases, state exemptions<\/span> offer more protection than the federal bankruptcy laws<\/span>.<\/p>\n

Some state bankruptcy laws<\/span> allow debtors to choose between federal and state exemptions<\/span>. These jurisdictions are called \u201cDual Choice\u201d states. Debtors choose whichever set of exemptions<\/span> (federal or state) best fits their financial situation<\/span>. New Jersey<\/span> is one of these states.<\/p>\n

While the bankruptcy <\/span>exemptions<\/span> in the Garden State are fair, they don\u2019t include a homestead exemption<\/span>. This exemption<\/span>\u00a0allows you to protect some or all of the equity in your primary residence. For this reason, debtors in New Jersey<\/span> who own real estate<\/span> tend to choose the federal exemptions<\/span>.<\/p>\n

Specific Exemptions<\/span> in New Jersey<\/span><\/h3>\n

New Jersey<\/span> bankruptcy<\/span> laws<\/span> don\u2019t offer a homestead exemption<\/span> or a motor vehicle<\/span> exemption<\/span>. They offer other opportunities, such as an unlimited clothing exemption<\/span>.<\/p>\n

The specific exemptions<\/span> available in an NJ bankruptcy<\/span> are as follows:<\/p>\n