What you should know about federal bankruptcy exemptions

On Behalf of | Sep 17, 2021 | Bankruptcy |

If you file for Chapter 7 bankruptcy in New Jersey, you may be at risk of losing property, such as a home, car or expensive jewelry. However, the federal government provides you with a variety of exemptions that may make it easier to protect the equity built up in those assets.

Do you have positive equity in your home?

You have positive equity in your home if it is worth more than the current balance on your mortgage. The federal government allows you to keep up to $25,150 of positive equity when filing for bankruptcy.

Personal property may be exempt from being seized

In addition to equity in your home, you may be allowed to retain up to $4,000 of equity in your car. Furthermore, you can retain up to $625 of equity in any personal items that you own up to $13,400. These items might include a couch, refrigerator, or anything else that you would furnish your home with.

The wildcard exemption can provide further financial protection

The wildcard exemption is worth $12,575 and can be used to protect assets that may not be covered by other exemption statutes. For example, you may be able to use a portion of this exemption to retain additional equity in your car or home. It can also be used in place of the homestead exemption if you rent a home as opposed to owning one.

Filing for bankruptcy may be an effective way to obtain protection from creditors and their ability to seize your assets. In many cases, creditors will not take property that has negative equity or equity that may be exempt under federal bankruptcy laws.