S2423 1R

An Act concerning bankruptcy exemptions ¹[, amending N.J.S.2A:17-19 and N.J.S.2A:17-56]¹ and supplementing Title 2A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. ¹[(New section)]¹ a. As used in this section:

"Condominium" means the form of real property ownership provided for under the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.).

"Dwelling house" means any residential property assessed as real property but shall not include a unit in a condominium or a horizontal property regime.

"Homestead" means:

(1) a dwelling house and the land on which that dwelling house is located which constitutes the place of the owner's domicile and is owned and used by the owner as the owner's principal residence;

(2) a condominium unit or a unit in a horizontal property regime which constitutes the place of the owner's domicile and is owned and used by the owner as the owner's principal residence; or

(3) a manufactured home as defined in section 2 of P.L.1990, c.61 (C.54:4-8.58).

¹“Homestead exemption” means the exemption provided by this section for real property of a bankruptcy estate. Any reference to the homestead exemption under this section shall be limited to this definition and purpose.¹

"Horizontal property regime" means the form of real property ownership provided for under the "Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.).

"Owner" means, but is not limited to, a purchaser under a deed of trust, mortgage or contract

"Principal residence" means a homestead occupied by the owner as the owner's permanent residence, as distinguished from a vacation home, property owned and rented or offered for rent by the owner, and other secondary real property holdings.

b. (1) Any resident of this State ¹who is an individual debtor in a bankruptcy proceeding¹ may hold exempt from ¹[attachment, execution and forced sale] property of the bankruptcy estate¹ a homestead exemption not exceeding $340,000 in value.

(2) The homestead exemption shall attach to the owner's interest in identifiable cash proceeds from the voluntary or involuntary sale of the homestead. The homestead exemption in identifiable cash

proceeds continues for 18 months after the date of the sale of the homestead or until the person establishes a new homestead with the proceeds, whichever period is shorter. Only one homestead exemption at a time may be held by an owner under this ¹[act] section¹.

(3) A person who is entitled to a homestead exemption shall hold that exemption by operation of law and no written claim or recording shall be required.

c. If the owner is married, ¹in a civil union, or domestic partnership,¹ the homestead may consist of the jointly owned property of the spouses ¹or partners¹ or the separate property of the spouses ¹or partners¹. ¹[Each spouse may claim a homestead exemption in an amount not to exceed the value provided in paragraph (1) of subsection b. of this act.]¹

d. (1) A homestead exemption may be abandoned by any of the following:

(a) a declaration of abandonment ¹[or waiver]¹;

(b) a transfer of the homestead property by deed of conveyance or contract for conveyance; or

(c) a permanent removal of the owner as a resident of this State. The owner may remove from the homestead for up to two years without an abandonment ¹[or a waiver]¹ of the exemption.

(2) A declaration of abandonment ¹[or waiver]¹ shall be executed by the owner and acknowledged. A declaration of abandonment ¹[or waiver]¹ is effective only from the time of its recording in the office of the county clerk.

e. The homestead exemption provided pursuant to this ¹[act] section¹ shall not affect or apply to attachments, executions and sales in connection with:

(1) government liens, including, but not limited to, taxes, special assessments or charges for other government services that, under State law, are senior liens;

(2) voluntarily created liens, including, but not limited to, mortgages and liens secured by real property;

(3) liens created pursuant to the "Construction Lien Law," P.L.1993, c.318 (C.2A:44A-1 et al.); and

(4) court judgments concerning:

(a) fraud;

(b) fraudulent transfers or conveyances;

(d) fraud, deceit or manipulation in a fiduciary capacity.

¹f. Any resident of this State who is an individual debtor in a bankruptcy proceeding may hold exempt from property of the bankruptcy estate 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, $10,000; all essential and ordinary household goods; any bank account valued at an amount less than $5,000; and all wearing apparel.

g. Any resident of this State who is an individual debtor in a bankruptcy proceeding may hold exempt from property of the bankruptcy estate payments made to the individual under federal law relating to the national emergency declared by the President of the United States under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the coronavirus disease 2019.

h. On the September 30 of the third year next following the effective date of this act, and on September 30 of each third year thereafter, the dollar amounts in this section shall be increased, effective the following January 1, by any increase during the three years prior to that September 30 in the consumer price index for all urban wage earners and clerical workers as calculated by the federal government.

i. Nothing in this section shall be construed to violate any provision of federal law.¹

¹[ 2. N.J.S.2A:17-19 is amended to read as follows:

2A:17-19. 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] $15,000, all essential and ordinary household goods, any bank account valued at an amount less than $5,000 , 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.

(cf: P.L.1973, c.162, s.1)]¹

¹[ 3. N.J.S.2A:17-56 is amended to read as follows:

2A:17-56. 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%] 10 percent, unless the income of such debtor shall exceed [250 %] 400 percent 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%] 25 percent of the debtor's gross earnings, provided that after the execution the debtor's income will not be less than [250%] 400 percent 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.

(cf: P.L.2005, c.124, s.11)]¹

¹[4.] 2.¹ This act shall take effect ¹[90 days] immediately¹ after enactment ¹and shall apply prospectively to proceedings commenced on or after that date¹.