Exempt Vs Non-Exempt Property in a Bankruptcy Case
New Jersey bankruptcy laws recognize two types of property: exempt and non-exempt. Exempt property is defined as anything that a debtor needs to survive and work. Non-exempt property is anything else that can be removed from a debtor’s possessions, such as a car or home. In most instances, non-exempt property is a necessity.
The value of a debtor’s property is part of the bankruptcy petition. The bankruptcy code allows debtors to claim exemptions for some or all of their property, depending on their income and financial situation. Essentially, if the debtor has a higher exemption value than the property’s equity, the bankruptcy trustee can liquidate the asset and pay off the creditors.
As a debtor, you must know the difference between non-exempt and exempt property. If you are unsure of which property is exempt, consult with an experienced bankruptcy attorney. An experienced attorney will be able to explain what your rights are in bankruptcy and how they might impact your situation. There are ways to protect your property through gifts and trusts.
In New Jersey, you may be able to keep some or all of your property. In some cases, you can even retain some of your non-exempt property and use the proceeds to pay off your debts. The Bankruptcy Code allows debtors to keep certain “exempt” property. However, in some cases, all of their property is liquidated and the debtor is left with nothing.