Senate Commerce Committee Statement to Senate, No. 2423 — State of New Jersey (June 24, 2020)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 2423, State of New Jersey, dated June 24, 2020, reporting the bill favorably with committee amendments. The bill lets a resident who is an individual debtor in a bankruptcy proceeding exempt from the bankruptcy estate a homestead not exceeding $340,000 in value, personal property up to $10,000 exclusive of wearing apparel, household goods, a bank account under $5,000, and payments under federal law relating to the national emergency with respect to the coronavirus disease 2019. The homestead exemption does not apply to government liens, mortgages, construction liens, and certain court judgments. Dollar amounts would rise every three years with the consumer price index, and the amendments make the bill effective immediately and prospective.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
2423

with
committee amendments

STATE
OF NEW JERSEY

DATED: JUNE
24, 2020

The
Senate Commerce Committee reports favorably and with committee amendments
Senate Bill No. 2423.

This
bill expands the list of property that may be held exempt from property of a
bankruptcy estate.

The bill provides
that any resident of this State who is an individual debtor in a bankruptcy
proceeding may hold exempt from property of the bankruptcy estate a homestead exemption not exceeding $340,000 in
value.

Pursuant to the bill,
the homestead exemption attaches 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 the bill.

A person who is
entitled to a homestead exemption holds that exemption by operation of law and
no written claim or recording is required.

If the owner is married, in a civil union, or domestic
partnership, the homestead may consist of the jointly owned property of the
spouses or partners or the separate property of the spouses or partners.

The bill provides
that a homestead exemption may be abandoned under certain circumstances.

The homestead
exemption provided under the bill does 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) certain court
judgments.

The bill provides that 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.

The bill provides that 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.

The bill provides that on the September 30 of the
third year next following the effective date of the bill, and on September 30
of each third year thereafter, the dollar amounts in the bill are to 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.

Nothing in the bill may be construed to violate any
provision of federal law.

COMMITTEE AMENDMENTS:

The committee amended the bill to:

1. Revise the provisions of the bill to provide that
the bill applies only to individual debtors in bankruptcy proceedings.

2. Clarify that the homestead exemption provisions
of the bill apply to individuals in civil unions and domestic partnerships.

3. Remove a provision of the bill that allows
spouses or partners to each claim a homestead exemption.

4. Provide that individuals 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.

5. Provide that individuals 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.

6. Remove provisions that allowed individuals to
waive the exemptions provided by the bill under certain circumstances.

7. Provide that the dollar amounts of the exemptions
in the bill will 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, every three years.

8. Provide that the bill is effective immediately
and applies prospectively to proceedings commenced on or after the bill’s
effective date.

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