When you file for bankruptcy in New Jersey, there are myriad different aspects of your life that will be affected. While most should be positive, there may be some things that come along with bankruptcy that you weren’t expecting. As your trusted local NJ bankruptcy attorneys, we at Scura are here to help you determine which assets will be affected during bankruptcy filing and set your mind at ease.
What Counts as “Property” When Filing for Bankruptcy in New Jersey?
When you file for bankruptcy, most of the personal property that you currently own or are entitled to receive will be considered assets. However, depending on the type of bankruptcy filing you choose to proceed with, your property may be handled differently. Luckily, all states make it possible for individuals to protect at least some of their assets when they file for bankruptcy. In fact, when you begin the process, the bankruptcy court will require you to separate all of your assets by type on the bankruptcy schedules.
Exempt vs. Non-Exempt Assets Under Chapter 7
When you file for bankruptcy in New Jersey, you are seeking protection from your creditors for any debts you have incurred. During this process, you should expect to surrender a sizable portion of your personal property or assets to the NJ bankruptcy estate, where your NJ bankruptcy trustee will then sell the property in an attempt to raise money that will be used to pay off your creditors. While you don’t have to turn over everything you own to the NJ bankruptcy estate, with Chapter 7 bankruptcy you should expect certain assets to be part of the liquidation process. However, certain assets may be exempt from the bankruptcy estate.
How Does Exemption Work?
New Jersey bankruptcy law works to allow debtors to keep a certain amount of their personal property while going through bankruptcy proceedings. This property is identified as “exempt” property and when handled carefully by the debtor and their NJ bankruptcy attorney, there is a possibility to save a great deal of personal property from being turned over to the NJ bankruptcy estate.
Typically, any property that is exempt is considered a necessity for modern life. This often includes items that are needed for living and working. While NJ bankruptcy laws are put in place to help debtors regain control of their finances and overcome crushing debt, taking away everything you own is counterproductive. Because New Jersey bankruptcy law recognizes this fact, your assets will fall into one of 2 categories: exempt and non-exempt.
Examples of Non-Exempt Property
Items that most debtors can expect to turn over to the NJ bankruptcy estate include:
- Cash on Hand
- Bank Accounts, Stocks and Bonds or Other Investments
- A Second or Vacation Home
- A Second Vehicle
- Family Heirlooms
- Stamps or Coin Collections
- Other Valuable Items
Examples of Exempt Property
Typically, debtors will be allowed to keep exempt items, including:
- Motor vehicles (up to a certain value)
- Household appliances
- Public benefits (including social security, public assistance and unemployment)
- Reasonably necessary clothing and household goods/furnishings
- Tools necessary for debtor’s trade or profession (up to a certain value)
- A portion of equity in the home
- And More
What About Assets Acquired After Filing for Bankruptcy in New Jersey?
In most cases, any property that you acquire after filing for Chapter 7 bankruptcy in New Jersey is not considered the property of the estate. However, there are a few exceptions to the rule. If a debtor is entitled to receive any property within 180 days after filing as a result of an inheritance, divorce decree, marital agreement settlement, life insurance policy or death benefit, this property will be considered part of the NJ bankruptcy estate.
If you are one of the millions of Americans struggling with crushing debt and you’re ready to take control of your financial future, we can help! Contact the NJ law team at Scura online for more information on the benefits of filing for bankruptcy in New Jersey and be sure to schedule an initial bankruptcy consultation today.