Bill Text: NJ A5707 | 2022-2023 | Regular Session | Introduced
Bill Title: Establishes homestead and bank account exemptions for persons in debt; increases existing exemption amounts for household goods.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2023-11-20 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A5707 Detail]
Download: New_Jersey-2022-A5707-Introduced.html
Sponsored by:
Assemblyman PAUL D. MORIARTY
District 4 (Camden and Gloucester)
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Assemblywoman ANNETTE QUIJANO
District 20 (Union)
SYNOPSIS
Establishes homestead and bank account exemptions for persons in debt; increases existing exemption amounts for household goods.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning exemptions from debt execution or attachment, supplementing Title 2A of the New Jersey Statutes and amending N.J.S.2A:17-19.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) As used in this act:
"Condominium" means the same as defined pursuant to section 3 of the "Condominium Act," P.L.1969, c.257 (C.46:8B-3).
"Dwelling house" means any residential property assessed as real property; but, the term shall not include a unit in a condominium or a horizontal property regime.
"Homestead" means any of the following if it is owned and used by the owner, the owners' family members, or anyone who has an interest in the property as that person's residence:
(1) a dwelling house and the land on which that dwelling house is located;
(2) a condominium unit or a unit in a horizontal property regime; or
(3) a manufactured home as defined pursuant to section 2 of P.L.1990, c.61 (C.54:4-8.58), including the land on which the manufactured home is situated.
Notwithstanding section 2 of P.L.1990, c.61 (C.54:4-8.58), manufactured homes constructed before 1974 shall be included in the definition of homestead even if they were not manufactured in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974. A person's homestead includes real and personal property.
"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 natural person who is a sole owner, joint tenant, tenant by the entirety, tenant in common, life estate holder, a holder of a beneficial interest in a trust, a purchaser under a deed of trust, mortgage, or contract, or a holder of a remainder interest.
"Principal residence" means a homestead occupied by the owner or a member of the owner's immediate family as the owner's or family's primary residence, as distinguished from a vacation home, property owned and rented or offered for rent by the owner, and other secondary real property holdings.
2. (New section) a. Any owner may exempt an interest in a homestead from attachment, execution, and forced sale in an amount the greater of:
(1) the amount of the median sale price for a single-family home in that county, in the calendar year prior to the calendar year in which the owner claims the exemption, as determined by using the United States Census Bureau's most recent 1-year American Community Survey data table, B25077, Median Value, or an equivalent valuation approved by the Department of Banking and Insurance should table B25077 be unavailable, not to exceed $600,000. If the owner or a dependent of the owner is either 60 years of age or older, or is physically or mentally disabled and because of such disability is unable to engage in substantial gainful employment and whose disability has lasted or can be expected to last at least 12 months or can be expected to result in death, the homestead exemption shall be double the aforementioned county median; or
(2) $300,000.
The amount set forth in subsection a. of this section shall be automatically adjusted to reflect changes by the percentage change, if any, from January 1 to December 31 of the preceding year, in the Consumer Price Index for All Urban Consumers, Annual City Average for the Mid-Atlantic Region, or its successor index, as published by the United States Department of Labor, Bureau of Labor Statistics, or its successor agency, beginning January 1, 2024 and every three years thereafter. The Department of Banking and Insurance shall triennially publish the three-year adjustment for an effective date of April 1 for the following year. Adjustments made pursuant to this paragraph shall be rounded up to the next $50.
b. 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 shall continue for 18 months after the date of sale for the homestead or until the person establishes a new homestead with the proceeds, whichever period is shorter. An owner shall be limited to protecting the owner's primary residence with the homestead exemption.
c. An owner who is entitled to a homestead exemption shall hold that exemption by operation of law and no written claim or recording shall be required.
d. In a bankruptcy case, the owner's exemption shall be determined on the date the bankruptcy petition is filed or, with respect to property that becomes property of the estate after that date, the date the property becomes property of the estate. If the value of the owner's interest in homestead property on that date is less than or equal to the amount that can be exempted under the homestead law, then the owner's entire interest in the property, including the owner's right to possession and interests of no monetary value, is exempt. Any appreciation in the value of the owner's exempt interest in the property during the bankruptcy case is also exempt, even if it exceeds the statutory limit.
e. Each owner may claim a homestead exemption in an amount not to exceed the values provided in subsection a. of this section.
3. (New section) a. A homestead exemption may be abandoned by any of the following:
(1) a declaration of abandonment or waiver;
(2) a transfer of the homestead property by deed of conveyance; or
(3) 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 or a waiver of the exemption.
b. A declaration of abandonment or waiver pursuant to paragraph (1) of subsection a. of this section shall be executed by the owner and acknowledged. A declaration of abandonment or waiver is effective only from the time of its recording in the office of the county clerk.
4. (New section) The homestead exemption provided pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall not affect or apply to attachments, executions and sales in connection with court judgments concerning:
a. fraud;
b. fraudulent transfers or conveyances;
c. duress; or
d. fraud, deceit, or manipulation in a fiduciary capacity.
5. N.J.S.2A:17-19 is amended to read as follows:
2A:17-19. Amount; exceptions
a. Goods and chattels, shares of stock or interests in any corporation and personal property of every kind designated by the debtor, not exceeding in value, exclusive of wearing apparel, [$1,000.00] $15,000, all essential and ordinary household goods, and all wearing apparel, [the property of a debtor] shall be reserved, both before and after [his] death, for [his] the debtor's use or that of [his] the debtor's 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, without the need for the judgment debtor to make a claim of exemption.
Nothing [herein contained] in P.L. , c. (C. ) (pending before the Legislature as this bill) shall be deemed or held to protect from sale under execution or other process any goods, chattels or property, [for] the purchase [whereof] of which gave rise to the debt or demand for which the judgment on which such execution or process was [issued, shall have been contracted, or to] obtained. P.L. , c. (C. ) (pending before the Legislature as this bill) shall not apply to process issued for the collection of taxes or assessments.
b. (1) In addition to any other funds exempt under this section, $10,000 in cash, in a deposit account or other account of the debtor, or $15,000 if the amount is held in a joint account, shall be reserved, both before and after death, for the debtor's use or that of the debtor's family or estate, and shall not be liable to be seized or taken by virtue of any execution or civil process issued from any court of this State. A garnishment order issued against a bank or other account shall instruct the garnishee that it is to garnish only the amount exceeding $10,000, or $15,000 in a joint account. If the judgment debtor has grounds to claim that more than $10,000 is exempt, or $15,000 in a joint account, the judgment debtor is entitled to file a petition in a court of competent jurisdiction to that effect.
(2) The garnishee shall be served with a notice from the judgment creditor instructing the garnishee to protect the exempt amount, to preserve the judgment debtor's access to the exempt amount, and to notify the judgment debtor of the garnishment or attempted garnishment, including information about the procedure by which the judgment debtor may object to the seizure of any funds that exceed the amount made exempt by this subsection. In addition to the notice to debtor required to be sent by R.4:59-1(h) and R.6:7-1(c) of the New Jersey Rules of Court, the Department of Banking and Insurance shall draft and publish a form that the judgment creditor shall be required to use to give the notice required by this subsection.
(3) An institution that is served with an execution or other civil process on funds held in a judgment debtor's account shall charge no fee to the judgment debtor regardless of any terms of agreement, or schedule of fees, or other contract between it and the judgment debtor if:
(a) the judgment debtor's funds are entirely exempt pursuant to subsection a. and paragraph (1) of subsection b. of this section; or
(b) funds are garnished or executed upon in violation of any section of P.L. , c. (C. ) (pending before the Legislature as this bill).
c. The amounts set forth in subsection a. and paragraph (1) of subsection b. of this section shall be automatically adjusted to reflect changes by the percentage change, if any, from January 1st to December 31st of the preceding year, in the Consumer Price Index for All Urban Consumers, the Annual City Average, for the Mid-Atlantic Region, or any successor indexes, as published by the Bureau of Labor Statistics within the United States Department of Labor, or its successor agency, beginning January 1st, 2024 and every three years thereafter. The Department of Banking and Insurance shall triennially publish the three-year adjustment on April 1st of the following year. Adjustments made pursuant to this paragraph shall be rounded up to the next $50.
d. Payments made pursuant to sections 24 or 32 of the "Internal Revenue Code of 1986" (26 U.S.C. s.24 or 26 U.S.C. s.32) are exempted from seizure on execution whether the payment has been received or is pending.
e. An individual debtor in a bankruptcy case pursuant to Title 11 of the United States Code may exempt, in addition to any other exemptions allowed under New Jersey law, any property listed in 11 U.S.C. s.522(d), to the extent it is not otherwise exempt under New Jersey law.
(cf: P.L.1973, c.162, s.1)
6. This act shall take effect on January 1, 2024, except that the Commissioner of Banking and Insurance may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.
STATEMENT
This bill establishes a homestead and bank account exemption for persons in debt and increases the existing exemption amount for household goods.
Under the bill, an owner can exempt an interest in the homestead from an attachment, execution, and forced sale in an amount that is the greater of:
(1) the amount of the median sale price for a single-family home in that county, in the calendar year prior to the calendar year in which the debtor claims the exemption, as determined by using the United States Census Bureau's most recent 1-year American Community Survey data table, B25077, Median Value, or an equivalent valuation approved by the Department of Banking and Insurance, not to exceed $600,000; or
(2) $300,000.
If the owner or a dependent of the owner is either 60 years of age or older, or is physically or mentally disabled and because of such disability is unable to engage in substantial gainful employment and whose disability has lasted or can be expected to last at least 12 months, or can be expected to result in death, the homestead exemption will be double the aforementioned county median. The bill provides that the homestead exemption will attach to the owner's interest in identifiable cash proceeds from the voluntary or involuntary sale of the homestead and that the exemption in identifiable cash proceeds would continue for 18 months after the date of sale for the homestead or until the owner establishes a new homestead with the proceeds, whichever period is shorter.
The bill also provides that, in a bankruptcy case, the owner's exemptions shall be determined on the date the bankruptcy petition is filed or, with respect to property respect to property that becomes property of the estate after that date, the date the property becomes property of the estate. If the value of the owner's interest in homestead property on such date is less than or equal to the amount that can be exempted under the homestead law, then the owner's entire interest in the property, including the owner's right to possession and interests of no monetary value, is exempt. Any appreciation in the value of the owner's exempt interest in the property during the bankruptcy case is also exempt, even if it exceeds the statutory limit.
The bill additionally increases the total value of household goods that are exempt from debt collection, from $1,000 to $15,000, and provides for an exemption from garnishment of up to $10,000 for cash held in a deposit account or other account of the debtor, or up to $15,000 if the cash amount is held in a joint account.
