New Jersey Bankruptcy Exemptions

You can protect property in a New Jersey bankruptcy using either New Jersey's exemption laws or the federal bankruptcy exemptions.

By , Attorney · University of the Pacific McGeorge School of Law

New Jersey bankruptcy exemption laws protect property in bankruptcy and are essential to a fresh start. When you file, the New Jersey bankruptcy exemptions will let you keep what you need to work and live. However, exemptions protect essential assets only, not unnecessary luxury goods.

To prevent a costly property loss, you'll want to understand the exemptions available under New Jersey, and what happens to property you can't protect with an exemption. In this article, you'll also learn whether you've lived in New Jersey long enough to use New Jersey bankruptcy exemptions.

Using Exemptions When Filing for Bankruptcy in New Jersey

New Jersey filers are fortunate because they have two exemption choices, the state or the federal bankruptcy exemptions. You'll want to review each list carefully and compare it to the property you own because you can't use exemptions from both lists. If you decide to use New Jersey's state exemptions, you can also use the federal nonbankruptcy exemptions.

Choosing an Exemption List in a New Jersey Bankruptcy

To help you make an informed choice, we've charted the New Jersey and federal exemption sets and explained key differences. You'll also find New Jersey and federal exemption links you can use to review the exemption statutes.

Our New Jersey Bankruptcy Exemption Analysis

New Jersey's exemptions don't protect as much property as other state exemptions, and most filers will do better using the federal bankruptcy exemptions. However, if you have significant equity in real estate held as tenancy by the entirety, you might be able to protect the entire property if only one spouse files for bankruptcy—check with a local bankruptcy attorney.

Exemption Caution: The state exemptions have not been updated and should not be relied on but only used as a general guide. Some state exemption amounts could be higher, and your state could have changed the law by adding new or deleting old exemptions. Verify exemption availability through research or by consulting a local bankruptcy lawyer.

Federal Bankruptcy Exemptions

Amounts valid between April 1, 2022, and March 31, 2025.

New Jersey Bankruptcy Exemptions

Amounts adjust periodically.

Homestead Exemption

  • $27,900 individuals
  • $55,800 for spouses who co-own property.

11 USC § 522(d)(1)


A filer holding property as tenancy by the entirety might have additional protections—talk with a local bankruptcy attorney.

Motor Vehicle Exemption

  • $4,450

11 USC § 522(d)(2)


Tools of the Trade Exemption

  • $2,800

11 USC § 522(d)(6)


Wildcard Exemption

  • $1,475, and
  • unused homestead exemption up to $13,950

11 USC § 522(d)(5)


    Personal Property Exemptions

    • $700 per item / $14,875 total for animals, crops, clothing, appliances and furnishings, books, household goods, and musical instruments.
    • jewelry up to $1,875
    • health aids
    • lost earning payments
    • personal injury recoveries to $27,900 (excludes pain and suffering and pecuniary loss)
    • wrongful death recoveries for a person on whom you depended
    • alimony and child support needed for support

    11 USC §§ 522(d)(3)-(6),(9)-(11)

    • clothing
    • $1,000 for furniture and household goods (can be applied to a vehicle)
    • burial plot
    • stocks and interest in corporations

    N.J. Stat. Ann. §§ 2A:17-19

    Retirement Accounts

    • tax-exempt retirement accounts
    • IRA and Roth IRA up to $1,512,350

    11 USC §§ 522(b)(3)(C),(b)(3)(C)(n)

    Note: These retirement accounts are exempt under the federal rules even if the filer uses state exemptions.

    • alcohol beverage control officers
    • city, county, and municipal employees
    • firefighters, police, and traffic officers
    • judges, prison employees, court reporters
    • teachers, school district employees
    • street and water department employees
    • public employees

    N.J. Stat. Ann. §§ 18A:66-51, 18A:66-116, 18:5-80, 18:13-112.53, 43:6A-41, 43:7-13, 43:8A-20; 43:10-14, 43:10-18.22, 43:10-18.71, 43:10-57, 43:10-105, 43:13-9, 43:13-22.60, 43:13-37.5, 43:13-44, 43:15A-53, 43:16-7, 43:16A-17, 43:19-17, 53:5A-45.

    Available Federal Exemptions

    Federal Bankruptcy Exemptions

    Federal Nonbankruptcy Exemptions

    Where to Find Statutes

    United States Code

    New Jersey Statutes Annotated

    Other New Jersey Bankruptcy Exemptions

    Below, you'll find more New Jersey exemptions. However, it's not an exhaustive list. Also, as with all laws, exemption laws can change. Be sure to check for current amounts and read the statute for qualification requirements (we haven't included them here).

    New Jersey Public and Charitable Benefit Exemptions

    • 44:7-35 – Public assistance
    • 34:15-29; 25:2-1 - Workers' compensation
    • 43:21-53 - Unemployment compensation
    • 52:4B-30 – Crime victims' compensation

    New Jersey Insurance Exemptions

    • A:9-57.6; App. A:9-57.6 - Civil defense workers' disability, death, medical or hospital benefits.
    • 17:18-12, 17B:24-8 - Health and disability benefits.
    • 17B:24-6b - Life insurance proceeds, dividends, interest, loan, cash, or surrender value, if not the insured.
    • 17B:24-7 - Annuity contract proceeds up to $500 per month.
    • 17B:24-9 - Group life or health policy or proceeds.
    • 38A:4-8 - Military member disability or death benefits.
    • 17:44B-1 - Fraternal benefit society benefits.

    Miscellaneous New Jersey Exemptions

    • 42:1A-11 – Business partnership property
    • 2A:17-56 - 90% of wages if income is less than $7,500
    • 38A:4-8 - Wages, disability, death benefits, or allowances received by military personnel

    How to Verify Available Exemptions in New Jersey

    Almost everyone who files for bankruptcy benefits from meeting with a bankruptcy lawyer. A local bankruptcy attorney will ensure a smooth and uneventful bankruptcy by complying with filing requirements and helping you protect all possible property.

    What Are the New Jersey Bankruptcy Exemption Timing Rules?

    It's tempting to move to a state with significantly more generous bankruptcy exemptions when filing for bankruptcy. But it doesn't work that way. To prevent people from abusing the system, filers must live in the state for at least two years. Otherwise, they must use the previous state's exemptions. Here's how it works.

    • If you've made your permanent home (your "domicile") in your current state for at least two years, you can use the state's exemptions (or the federal exemptions if allowed).
    • If your domicile hasn't been in the same state for two years, the rules get more complicated, so prepare yourself. It sounds so strange we'll explain it in three different ways so that you know you didn't read it wrong. Here goes: You'll choose the state you lived in the longest during the 180 days immediately before the two years before filing.

    Did you get that? If not, here's a way to figure it out. Count back two-and-a-half years. Then ask yourself where you lived the longest during the first six months of that two-and-a-half-year period.

    Still confused? Let's try an example. Suppose you planned to file on January 1, 2022. Your two-and-a-half-year period would start July 1, 2019, and you'd qualify to use the exemptions of whichever state you resided in the most from July 1, 2019, through December 31, 2019. You wouldn't have to file your case there, but you'd use that state's exemptions. Hopefully, that helps!

    Special Homestead Exemption Rules

    The homestead exemption protects your ownership interest in your home. You'll need to read your state's homestead statute to determine the specifics, such as the amount of equity and acreage covered, whether the exemption protects a manufactured home, and if you need to file a homestead exemption with the county clerk. But in all states, the property must be your residence.

    What Happens to Property You Can't Exempt in a New Jersey Bankruptcy?

    It will depend on the chapter you file. In Chapter 7 bankruptcy, you lose property not covered by an exemption. The bankruptcy trustee responsible for managing your case will sell the property for the benefit of your creditors.

    In Chapter 13 bankruptcy, you can keep all your property. However, that luxury comes at a price. You'll pay your creditors the value of any property not covered by an exemption in your Chapter 13 repayment plan.

    For example, say you own a car outright worth $3,000, and your state has a vehicle exemption of up to $5,000. Here's what would happen in each chapter.

    • Chapter 7 Bankruptcy. If you file for Chapter 7 bankruptcy, you will get to keep your car because the exemption would protect the equity fully. In the same example, if your vehicle were worth $15,000, the bankruptcy trustee would sell your vehicle, pay you $5,000 for the exemption, and distribute the rest to your unsecured creditors.
    • Chapter 13 Bankruptcy. In Chapter 13, you wouldn't need to pay extra to your creditors through your repayment plan. However, if the car were worth $15,000, you'd need to pay your creditors at least $10,000 (minus sales costs) through your plan.

    Keep in mind that these examples don't take into account a vehicle loan. You'll find more information about protecting financed homes and cars in a New Jersey bankruptcy below.

    How Do You Protect a Financed Home or Car in a New Jersey Bankruptcy?

    Many wonder if they can wipe out a home mortgage or car loan and keep the property without paying for it. The simple answer is "No." If you still owe a balance on your mortgage or car loan, you must pay as agreed to prevent the lender from foreclosing or repossessing the property.

    Why? Because when you purchased it, you gave the lender a property "lien." The lien created a secured debt, allowing the lender to take back the property if you don't pay as agreed, even in bankruptcy.

    Protecting Financed Property in Chapter 7 Bankruptcy

    Chapter 7 doesn't have a mechanism that will allow you to catch up on a mortgage or car payment over time. So, the mortgage or car payment must be current. You'll lose the property if you're behind on the payment and file for Chapter 7.

    The lender will ask the bankruptcy court to allow the lender to proceed with foreclosure or repossession during the bankruptcy or wait until Chapter 7 ends.

    A few more vehicle protection options exist in Chapter 7. Learn more about how to file for bankruptcy without losing a car.

    Protecting Financed Property in Chapter 13 Bankruptcy

    You don't lose property in Chapter 13. However, before the bankruptcy judge approves or "confirms" your plan, you must prove you earn enough to make the monthly payment and pay the late payments by the end of the three- to five-year plan.

    Some filers can pay less on financed property if they qualify to reduce an auto loan to the car's value or strip a junior mortgage, credit line, or lien from a home. Learn more about catching up on arrearages in Chapter 13 and how mortgages work in bankruptcy.

    Navigating Your Bankruptcy Case

    Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help you find the answers you need.

    Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.

    More Bankruptcy Information

    Bankruptcy Forms and Document Checklist

    Chapters 7 and 13 Bankruptcy Form List

    Bankruptcy Document Checklist

    You'll find fillable, downloadable bankruptcy forms on the U.S. Courts bankruptcy form webpage. The forms relating to this article topic include the following:

    Schedule A/B: Property

    Schedule C: The Property You Claim as Exempt

    Statement of Intention for Individuals

    More You Might Like

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    We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

    Updated: December 19, 2023

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