Posted on Apr 01, 2010

Someone filing bankruptcy does not necessarily lose everything they own and, contrary to popular myth, you do not automatically lose your house because you filed.  This is because of a feature of the bankruptcy code called "exemptions."  These are protections against the liquidation of assets by creditors that exist in both federal and state law.   Here in New Jersey, folks filing bankruptcy use the federal exemptions under section 522 of the bankruptcy code.

Exemptions protect your assets up to a certain value (although some have no limit), and the amounts are adjusted every three years (starting in 1998) on the first of April.  Thus the numbers have changed as of today to extend more protection, in keeping with inflation on the cost of replacement value.  The adjustments are as follows:

Home Equity                                      $20,200  to $21,625

Motor vehicles                                   $3,225 to $3,450

Household goods and furnishings           $10,775 to $11,525

Jewelry                                             $1,350 to $1,450

Wildcard (Useable for Any Asset)           $1075 to $1,150

(Unused home equity wildcard)             $10,125 to $10,825

Tools of trade                                     $2,025 to $2,175

Life insurance cash surrender value      $10,775 to $11,525

Personal injury recovery                      $20,200 to $21,625

Bear in mind that these exemptions are per debtor. Therefore, assets held jointly by a married couple filing bankruptcy are protected by double these numbers!  In this economy, with bankruptcy filings on the rise, this is a welcome change that allows people to keep important assets that might otherwise be lost.  Although the adjustments are not huge, they can make a difference in some cases.

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.

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