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How Bankruptcy is Different in New Jersey

The bankruptcy code is federal law, in New Jersey and every state in the country. Typically, federal law trumps state law. There are three circumstances in which bankruptcy law may be applied differently in New Jersey and another state.

  1. The first circumstance is the exemptions that are permitted in different states. Each state has a statute or laws that permit their residence to use the Federal exemptions and/or the state’s exemptions. I provide in a separate part of this website the list of the Federal and New Jersey State exemptions. This means that the state law determines whether a bankruptcy debtor can apply only the state exemptions, which are created by the state, or their choice of using the state or federal exemptions. The federal exemptions are stated in the bankruptcy code. Although the federal exemptions are not created by the states, the state determines whether the debtor may use the federal or state exemptions.
  2. There may be certain situations whereby the debtor may benefit by using the state or federal exemptions. However, an individual may only use the Federal or the State exemptions and not both, together. For example, a Florida resident filing a bankruptcy case in Florida may wish to use the Florida exemptions if they have substantial equity in their house, as Florida allows a debtor to exempt any and all equity in their residence. In general, virtually all bankruptcy cases filed in New Jersey apply the federal exemptions.
  3. The second circumstance in which bankruptcy may be applied differently between states and New Jersey, is the bankruptcy code’s application of State laws. Certain terms of the bankruptcy code are defined by state laws. For example, the bankruptcy code uses a term “lien”. A state bankruptcy court must look to the state law to determine what is a lien, what kinds of liens are there, and how is a lien created. The state laws of New Jersey may define a lien differently than another state.
  4. The third circumstance as to why a New Jersey bankruptcy court may apply the bankruptcy code different than another state is the trustee’s and judge’s interpretations of the bankruptcy code. The bankruptcy code is voluminous, unclear, subjective, and open to various interpretations. Therefore, a judge in New Jersey may interpret the meaning of a bankruptcy clause differently than a judge in another state.

Consulting a New Jersey Bankruptcy Attorney

Bankruptcy laws in New Jersey are complicated, as they are in any state. It is important that you discuss your bankruptcy case with an experienced bankruptcy lawyer to ensure that you are aware of all of your options and the implications of those options. The NJ bankruptcy attorneys at The Law Offices of Robert Manchel know the bankruptcy laws and are familiar with local judges and their interpretations of the bankruptcy code. Contact us today for a free case evaluation.