A homestead protection law is designed to protect individual property owners from losing their primary residence should they fall on hard times. The idea behind a homestead protection is that no one should be made homeless just because of a reversal in financial stature.
How Homestead Protection Works
Homestead protection usually goes hand in hand with filing for bankruptcy. A homestead protection would allow you to stay in your home by protecting some or all of the equity in the property. The laws make it so that you can register part of your personal property as a homestead, with that part of your estate being off-limits to most creditors. In addition to exempting real and personal property, like a house, some homestead laws exempt the following:
- Water rights
- Burial plots
- Musical instruments
- Family photos
Of course, some of the aforementioned exemptions are unique to different states. Regardless, homestead protection laws are helpful to many, and nearly every state has some form of a homestead protection law.
Unfortunately, the state of New Jersey is one such state that does not offer homestead protections. However, if you are seeking homestead protections, you can do so through the federal government.
Government Homestead Protections and Bankruptcy
As a New Jersey homeowner, you could potentially receive homestead protection through filing for Chapter 7 bankruptcy and using federal exemption statutes. Under Chapter 7 bankruptcy, the equity in your home is typically considered an asset that can be used to pay creditors. In order to determine how much equity you have in your home, you subtract your mortgage balance from the overall value of your home. If you have less than $22,975 of equity in your home (this number is adjusted every three years), the property can be protected against being sold to pay debts under a federal homestead exemption. If you have more than $22,975 in equity, then your home will not be protected under federal exemption. A bankruptcy trustee can sell your home to pay off your creditors with the proceeds. However, you should get to keep the $22,975 that is exempted under federal law.
Your home is definitely something you will want to hold on to, especially if it is your primary residence. To not be able to exempt your home during bankruptcy can be a very difficult process to handle. When it comes down to it, an experienced attorney can help you figure out how to best protect your property in New Jersey. Finding an attorney experienced in both real estate and bankruptcy is a major plus.
Contact a Cherry Hill Attorney Who Is Experienced in Real Estate & Bankruptcy Law
For someone well-versed in both real estate and bankruptcy in New Jersey, turn to the Law Office of Joel R. Spivack. Attorney Joel Spivack has knowledge of both Chapter 7 and Chapter 13 bankruptcy and can help in figuring out how to best keep your house during either bankruptcy process. Mr. Spivack may even come to find that a bankruptcy alternative exists that could be worth your while. For more than 25 years, he has been helping clients in Cherry Hill, Camden, Haddonfield, Winslow, and throughout NJ get the fresh financial start they need while holding onto property that is near and dear.
Joel Spivack is ready to put his experience and tools to work helping you. To begin learning about what he can do for you, call (856) 488-1200 or fill out the online contact form today. The law firm office is conveniently located at 1820 Chapel Ave W #195, Cherry Hill, NJ 08002.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.