What Property Can I Keep In A Chapter 7?

New Jersey is one of 19 states which allow Chapter 7 debtors to choose between federal and state exemptions. If property is exempt, you get to keep it in a bankruptcy. What are some of the differences between state and federal bankruptcy exemptions on some commonly held property items?


New Jersey does not have an exemption for your home.

However, the federal exemption is a bit more straightforward. Up to $22,975 of equity is exempt. After the real estate crash, fewer and fewer people have equity in their homes and as a result find that they can easily protect their homes in a bankruptcy filing.


New Jersey does not have a vehicle exemption, but does allow up to $1,000 of personal property to be exempt. This personal property exemption can be used on a vehicle.

If using the federal exemptions, you can claim up to $3,675 in equity for a motor vehicle.

Retirement Benefits

IRAs, 401(k)s, Social Security benefits, pension plans and other retirement benefit plans are exempt under both state and federal bankruptcy laws. So, bankruptcy will not disturb your nest egg. However, if you have borrowed money against your retirement savings, you will still be required to repay those loans.

The Wildcard

Federal exemptions provide for a “wildcard” of $1,225 plus up to $11,500 of unused homestead exemption to use on anything that you want. This wildcard exemption can be used to protect extra equity in a car, cash at home, money in the bank, or extra equity in a home, boat, investment property, timeshare… you name it!

On a practical basis, New Jersey state exemptions are very meager and infrequently chosen, especially since the federal exemptions under the Bankruptcy Code are so generous. As a result of the federal exemptions under the Bankruptcy Code, the vast majority of people who file a Chapter 7 bankruptcy are able to keep everything that they own, while shedding their debts.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

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