New Jersey Bankruptcy Laws : New Jersey State Exemptions

Complete state of New Jersey bankruptcy exemptions laws which protect a debtor’s property when personal bankruptcy is filed.

2A:17-56 Limitation on amount specified in execution.

a. In no case shall the amount specified in an execution issued out of any court against the wages, debts, earnings, salary, income from trust funds or profits due and owing, or which may thereafter become due and owing to a judgment debtor, exceed 10%, unless the income of such debtor shall exceed 250 % of the poverty level for an individual taking into account the size of the individual’s family, in which case the court out of which the execution shall issue may order a larger percentage.
b. Notwithstanding subsection a. or any other law to the contrary, for all wage execution applications filed by the State pursuant to subsection b. of N.J.S.2A:17-50 after the effective date of P.L.2005, c.124 (C.2A:16-11.1 et al.), the State may seek a wage execution of up to 25% of the debtor’s gross earnings, provided that after the execution the debtor’s income will not be less than 250 % of the poverty level for an individual taking into account the size of the individual’s family.
Nothing in this subsection shall be construed to violate any provision of federal law.
38A:4-8. Compensation exempt from legal process
The pay and allowances due or to become due to any member of the organized militia for military duty therein, and any compensation that may be awarded for injuries, disabilities or death sustained therein, shall be exempt from attachment, execution or other legal process.
2A:17-19. Amount; exceptions
Goods and chattels, shares of stock or interests in any corporation and personal property of every kind, not exceeding in value, exclusive of wearing apparel, $1,000.00, and all wearing apparel, the property of a debtor shall be reserved, both before and after his death, for his use or that of his family or his estate, and shall not be liable to be seized or taken by virtue of any execution or civil process whatever, issued out of any court of this State.
Nothing herein contained shall be deemed or held to protect from sale under execution or other process any goods, chattels or property, for the purchase whereof the debt or demand for which the judgment on which such execution or process was issued, shall have been contracted, or to apply to process issued for the collection of taxes or assessments.
2A:26-4. Property exempt
Household goods and furniture not exceeding $1,000.00 in value of a person shall be exempt from attachment, except for a debt incurred in the purchase thereof.
If the attaching officer believes that the goods and furniture exceed such value, he may attach and include them in his inventory and appraisement, and the person entitled to the exemption, his family or his estate shall forthwith, on demand by the officer, select, from the inventoried and appraised property, goods and furniture to the value of $1,000.00. A failure to make the selection shall be deemed to be a waiver of the exemption.
17:18-12. Disability benefits not liable to execution, attachment, garnishment, etc.; rights of creditors
No money or other benefit paid, provided or allowed to be paid, provided or allowed by any stock or mutual life, health or casualty insurance corporation on account of the disability from injury, or sickness of any insured person under any policy of insurance, whether heretofore or hereafter issued, shall be liable to execution, attachment, garnishment, or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law, to pay any debt or liability of such insured person whether such debt or liability was incurred before or after the commencement of such disability, but this section shall not affect the assign ability of any such disability benefit otherwise assignable, nor shall this section apply to any money income disability benefit in an action to recover for necessaries contracted for after the commencement of the disability covered by the disability clause or contract allowing such money income benefit. Subject to the statute of limitation, the amount of any premiums paid by the insurer for such disability insurance, in fraud of creditors, with interest thereon, shall inure to such creditor’s benefit from the proceeds of such insurance, but all payments made in accordance with such disability insurance contract before written notice by or on behalf of some creditors, with specifications of the amount claimed, claiming to recover for certain premiums paid in fraud of creditors, has been served on the insurer, shall discharge the insurer from all liability to such creditor for such payments.

17B:24-6. Exemption of proceeds–life insurance

a. If a policy of insurance, whether heretofore or hereafter issued, is affected by any person on his own life, or on another life, in favor of a person other than himself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any such person, then the lawful beneficiary, assignee or payee of such policy, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary is reserved or permitted, or the policy is made payable to the person whose life is insured or to the executors or administrators of such person if the beneficiary shall predecease such person.
Except however the foregoing shall not be applicable if the lawful beneficiary, assignee or payee of such policy is any of the following: (1) The insured, (2) The person so effecting such insurance, or (3) The executors or administrators of such insured or the person so effecting such insurance.
b. Such proceeds and avails shall be exempt from any liability for any debt of the beneficiary existing at the time the proceeds and avails become available for his use; provided that, subject to the statute of limitations, the amount of any premiums for such insurance paid with intent to defraud creditors, with interest thereon, shall inure to their benefit from the proceeds of the policy; but the insurer issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless, before such payment, the insurer shall have received written notice at its home office, by or in behalf of a creditor, of a claim to recover for transfer made or premiums paid with intent to defraud creditors setting forth such facts as will enable the insurer to ascertain the particular policy.
c. For the purposes of subsections a. and b. above, a policy shall also be deemed to be payable to a person other than the insured if and to the extent that a facility-of-payment clause or similar clause in the policy permits the insurer to discharge its obligation after the death of the individual insured by paying the death benefits to a person as permitted by such clause.

17B:24-7. Exemption of proceeds–annuity contracts

a. The benefits, rights, privileges, powers and options which under any annuity contract heretofore or hereafter issued are due or prospectively due the annuitant, shall not be subject to execution, garnishment, attachment, sequestration or other legal process nor shall the annuitant be compelled to exercise any such rights, privileges, powers, or options, nor shall creditors be allowed to interfere with or terminate the contract, except:

(1) As to amounts paid, with intent to defraud creditors, for or as consideration for any such annuity, with interest thereon, and of which the creditor has given the insurer written notice at its home office prior to the making of the payments to the annuitant out of which the creditor seeks to recover. Any such notice shall set forth such facts as will enable the insurer to ascertain the particular annuity contract.
(2) The total exemption of benefits presently due and payable to any annuitant periodically or at stated times under all annuity contracts under which he is an annuitant, shall not at any time exceed $500.00 per month for the length of time represented by such installments, and such periodic payments in excess of $500.00 per month shall be subject to garnishee execution to the same extent as are wages and salaries.
(3) If the total benefits presently due and payable to any annuitant under all annuity contracts under which he is an annuitant, shall at any time exceed payment at the rate of $500.00 per month, then the court may order such annuitant to pay to a judgment creditor or apply on the judgment, in installments, such portion of such excess benefits as to the court may appear just and proper, after due regard for the reasonable requirements of the judgment debtor and his family, if dependent upon him as well as any prior court orders.

b. If the contract so provides, the benefits, rights, privileges, powers or options accruing under such contract to a beneficiary or assignee shall not be transferable nor subject to commutation, and if the benefits are payable periodically or at stated times, the same exemptions and exceptions contained herein for the annuitant, shall apply with respect to such beneficiary or assignee.

17B:24-8. Exemption of proceeds–health insurance and disability provisions
Except as may otherwise be expressly provided by the policy or contract, the proceeds or avails of all policies of health insurance and of provisions providing benefits on account of the insured’s dismemberment, loss of sight or disability which are supplemental to life insurance policies or annuity contracts, heretofore or hereafter effected, shall be exempt from all liability for any debt of the insured, and from any debt of the beneficiary existing at the time the proceeds are made available for his use. Nothing herein contained shall apply to any income disability benefit in any action to recover for necessaries contracted for after the commencement of the disability covered by the disability clause or contract allowing such income benefit.

17B:24-9. Exemption of proceeds–group insurance

a. A policy of group life insurance or group health insurance or the proceeds thereof payable to the individual insured or to the beneficiary there under, shall not be liable, either before or after payment, to be applied by any legal or equitable process to pay any debt or liability of such insured individual or his beneficiary or of any other person having a right under the policy. The proceeds thereof, when not made payable to a named beneficiary or to a third person pursuant to a facility-of-payment clause, shall not constitute a part of the estate of the individual insured for the payment of his debts. Nothing herein contained shall apply to any income disability benefit in any action to recover for necessaries contracted for after the commencement of the disability covered by the disability clause or contract allowing such income benefit.
b. This section shall not apply to group insurance covering the debtors of a creditor, to the extent that such proceeds are applied to payment of the obligation for the purpose of which the insurance was so issued.
17B:24-10. Policy settlements
Any life insurer shall have the power to hold under agreement the proceeds of any policy issued by it, upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries, and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as set forth in the policy or as agreed to in writing by the insurer and the policyholder. Upon maturity of a policy, in the event the policyholder has made no such agreement, the insurer shall have the power to hold the proceeds of the policy under an agreement with the beneficiaries. The insurer shall not be required to segregate the funds so held but may hold them as part of its general assets.
18A:66-51. Allowances exempt from taxes; assignment of group insurance policy rights and benefits (Teachers)
The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this article, and the moneys in the various funds created under this article, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State of Federal court, and, except as hereafter in this section and as in this article otherwise provided, shall be un assignable.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
18A:66-116.Exemptions (School District Employees)
The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this article, and the moneys in the various funds created under this article, shall be exempt from levy and sale, garnishment, attachment or any other process arising out of any State court and, except as otherwise provided, shall be un assignable.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically, but not by way of limitation, the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act (P.L.1995, c.240), shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
34:15-29. Compensation preferential lien; claim not assignable; set offs (Workers’ Compensation)
The right of compensation granted by this chapter shall have the same preference against the assets of the employer as is now or may hereafter be allowed by law for a claim for unpaid wages for labor. Claims or payments due under this chapter shall not be assignable, and shall be exempt from all claims of creditors and from levy, execution or attachment. The right of compensation granted by this chapter may be set off against disability pension benefits or payments but shall not be set off against employees’ retirement pension benefits or payments.
43:6A-41. Right to pension, retirement allowance or benefit and moneys in various funds; exemption from taxes and legal process; un assignability (Judges)
The right of a person to a pension, retirement allowance or any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State or federal court, and, except as hereinafter in this section and as in this act otherwise provided, shall be unassignable.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.

43:7-13. Creation of pension fund
7. For the purpose of paying the pensions, a fund shall be created as follows:

(a) There shall be deducted from every payment of salary to a prison officer benefited by this act, 6% of the amount thereof;
(b) That the State shall pay into said fund yearly an amount equal to 6% of the total salaries paid to the said prison officers who shall benefit by this act, which amount shall be submitted to the Legislature yearly by the pension commission. The Legislature shall make an appropriation sufficient to provide for such obligation of the State;
(c) There shall be added to such fund all fines imposed upon any such prison officer, all money donated to the fund, all moneys deducted from the salary of such prison officers because of absence or loss of time due to suspension, and 1/2 of all rewards paid for any purpose to such prison officer;
(d) If there shall not be sufficient money in the fund so created, the Legislature shall include in any appropriation bill a sum sufficient to meet the requirements of the fund for the time being;
(e) All pensions granted under this article shall be exempt from any State or municipal tax, levy and sale, garnishment or attachment, or any other process whatsoever, and shall be un assignable. The State may pay all or any portion of its unfunded accrued liability under the retirement system from any source of funds legally available for the purpose, including, without limitation, the proceeds of bonds authorized by law for this purpose.
43:8A-20. Exemption from taxation and from garnishment or other process; assignment (Alcohol Beverage Control Officers)
The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process, and except as in this act otherwise provided, shall be un assignable.
43:10-57. Source of pension fund; right of withdrawal; exemptions
A fund shall be created in the following manner for the purpose of paying such pensions, to wit: There shall be deducted from every payment of salary to each county probation officer three per centum (3%) of the amount thereof, then there shall be contributed annually by the county an amount equivalent to three per centum (3%) of such probation officers’ salaries; to such sum there shall be added all moneys donated for the purpose of such fund, and all rewards which may be paid to any county probation officer while acting as such county probation officer, all of which moneys and rewards shall be paid over to the board of chosen freeholders of the county to be deposited in such fund. In case, at any time, there shall not be sufficient money in such pension fund to pay such pensions, the board of chosen freeholders of the county shall, from time to time, include in any tax levy a sum sufficient to meet the requirements of such pension fund. Whenever such pension fund shall exceed an amount which the board of chosen freeholders of such county shall by resolution from time to time determine to be adequate for such pension fund, no moneys, except the three per centum (3%) specified in this article, and the moneys given or donated as herein mentioned and any aforementioned rewards, shall be paid into such fund, unless and until the amount of such fund shall fall below the amount thus determined to be adequate. Any county probation officer who has paid into the pension fund for at least four years, and is no longer in the service, shall have the right to withdraw from such pension fund and shall be entitled to a refund of the moneys theretofore deducted from his salary. All pensions granted under this article shall be exempt from any State or municipal tax, levy and sale, garnishment or attachment, or any other process whatsoever, and shall be un assignable.
43:10-105. Exemption from taxation and process (County Employees)
All pensions granted under this act shall be exempt from any State or municipal tax, levy, and sale, garnishment or attachment or any other process whatsoever.

43:13-9. Pension fund; exemption from taxation and process
For the purpose of paying the pensions a fund shall be created in each city where this article takes effect, as follows:

a. There shall be deducted from every payment of salary to a municipal employee benefited by this article 3% of the amount thereof and if any employee shall hereafter enter the service of the municipality after reaching the age of 35 years, such percentage shall be increased to such an amount as shall be determined by the pension commission to correspond to the risk arising by the age of such employee.
b. The city shall raise by taxation and pay into the fund yearly an amount equal to 4% of the total salaries paid to the employees who shall benefit by this article.
c. There shall be added to such fund all fines imposed upon any such employee, all moneys given or donated to the fund, all moneys deducted from the salary of such employee because of absence or loss of time due to suspension and 1/2 of all rewards paid for any purpose to such employees.

If there shall not be sufficient money in the fund so created, the governing body of such city shall include in any tax levy a sum sufficient to meet the requirements of the fund for the time being.
All pensions granted under this article shall be exempt from any State or municipal tax, levy and sale, garnishment or attachment or any other process whatsoever, and shall be un assignable, except for the purpose and to the extent necessary to authorize, with the member’s or pensioner’s consent, deductions of premiums for group hospitalization and medical-surgical insurance.

43:13-44. Pension fund; exemption from taxation and process
For the purpose of paying the pensions a fund shall be created in each village where this article takes effect, as follows:

a. There shall be deducted from every payment of salary to a municipal employee or officer benefited by this article five per centum (5%) of the amount thereof and if any employee or officer hereafter enters the service of the municipality after reaching the age of thirty-five years, such percentage shall be increased to such an amount as the pension commission determines to correspond to the risk arising by the age of such employee.
b. The village shall raise by taxation and pay into the fund yearly an amount equal to seven per centum (7%) of the total salaries paid to the employees or officers who shall benefit by this article, and may raise by taxation and pay into the fund yearly such additional amount or amounts as, upon the recommendation of the pension commission of the municipality, the governing body shall determine to be necessary to maintain the fund.
c. There shall be added all fines imposed upon any such employee or officer, all moneys given or donated to the fund, all moneys deducted from the salary of such employee or officer because of absence or loss of time and one-half of all rewards paid for any purpose to such employees or officers.

If there shall not be sufficient money in the fund so created, the governing body of such village shall include in any tax levy a sum sufficient to meet the requirements of the fund for the time being.
All pensions granted under this article shall be exempt from any State or municipal tax, levy and sale, garnishment or attachment or any other process whatsoever, and shall be un assignable.

43:15A-53. Benefits under chapter exempt from taxation and process; exception; assignment of group insurance policy rights and benefits (Public Employees)
The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State or Federal court and, except as in this section and in this act otherwise provided, shall be un assignable.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
43:16-7. Trustees of funds; rules and regulations; payment of moneys and assets to state treasurer; exemptions for pension payments; investments
The commission shall be and are hereby constituted trustees of all the funds established by this act. The commission may make all necessary rules and regulations with regard thereto. Such rules and regulations shall be consistent with those adopted by the other pension funds within the Division of Pensions in order to permit the most economical and uniform administration of all such retirement systems. All moneys and assets of and belonging to the funds consolidated and required by this chapter to be consolidated and transferred to the pension fund, together with all increments and contributions thereto shall be received and paid over to the State Treasurer, whose official bond shall cover the same. No moneys shall be paid out of the consolidated fund except upon the warrant of the fund, signed by the chairman and secretary. All pensions granted under this chapter shall be exempt from execution, garnishment, attachment, sequestration or other legal process. All moneys not needed for the immediate payment of pensions under this chapter shall be invested for the commission by the Director of the Division of Investment established pursuant to the provisions of chapter 270 of the laws of 1950, subject to the limitations contained in section 11 of said chapter. A member of the commission, to be designated by a majority vote thereof, shall serve on the State Investment Council as a representative of said commission.
43:16A-17. Exemption from taxes, garnishment, etc.; assignment of group insurance policy rights and benefits (Firefighters and Police)
The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process, and except as hereinafter in this section and as in this act otherwise provided, shall be un assignable.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
43:18-12. Pension exempt from legal process (Health Employees)
All pensions created under this chapter shall be exempt from execution, attachment or other legal process.
43:19-17. Pension exempt from legal process (Street and Water Employees)
All pensions granted under this chapter shall be exempt from execution, attachment or other legal process.
43:21-53. Rights in payments (Unemployment Compensation)
Benefits payable under an approved private plan by an employer as a self-insurer shall have the same preference against the assets of the employer as are now or may hereafter be allowed by law for a claim for unpaid wages for labor, and benefits under the State plan and for any disability during unemployment as provided by section 43:21-4(f) or under an approved private plan shall not be assignable or subject to levy, execution, attachment or other process for satisfaction of debts.
44:7-35. Assistance exempt from taxation levy and process; bankruptcy
All amounts paid as old age assistance shall be exempt from any tax levied by the state or by any subdivision thereof, and exempt from levy and sale, garnishment, attachment, or any other process whatsoever and shall be inalienable in any form, and in case of bankruptcy shall not pass to the trustee or other person acting on behalf of the creditors of the aged needy person.
45:27-21 Dedication of property to cemetery purposes.
a. Dedication of property to cemetery purposes pursuant to this act shall not be invalid as violating any law against perpetuities or the suspension of the power of alienation of title to use of property. It shall be expressly permitted in respect for the dead and as provision for the burial of human remains and as a duty to, and for the benefit of, the general welfare.
b. After property is dedicated to cemetery purposes by a cemetery company, neither the dedication nor the title of the interment space owner shall be affected by the dissolution of the cemetery company by nonuse on its part, by alienation of the property, by any encumbrances, by sale under execution, or otherwise except as provided in this act and by law.
53:5A-45. Tax exemption; exemptions from levy and sale, garnishment, attachment or other process; assign ability of rights; assignment of group insurance policy rights and benefits (State Police)
The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State or Federal court, and, except as hereinafter in this section and as in this act otherwise provided, shall be un assignable.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.

Note: While this reference information is current as of August 2010, it may not reflect the most up-to-date exemption figures on official state of New Jersey bankruptcy court statutes.

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