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 application of exemptions. Each state has a list of bankruptcy exemptions. Additionally, the bankruptcy code has a list of exemptions. However,  each state determines whether a resident may use only the state’s exemptions, or whether a person has the option of using the state’s exemptions or the federal exemptions. However, a person that has the option, may only use federal or the state’s exemptions and not a some of each. This bankruptcy website provides a detailed explanation of the meaning and application of exemptions. There may be certain situations whereby the debtor may benefit by using the state or federal exemptions. New Jersey allows a debtor to use the federal bankruptcy exemptions or the state’s exemptions. New Jersey’s exemptions should be used in very limited circumstances. In general, virtually all bankruptcy cases filed in New Jersey apply the federal exemptions.
2. The second circumstance in which bankruptcy may be applied differently between other 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 bankruptcy court must look to the state laws to determine the meaning of a lien, the types of liens, and how a lien created. The state laws of New Jersey may define a lien differently than another state. Also, if a debtor files in New Jersey and owns real estate in Alabama, the NJ. bankruptcy court must apply Alabama real estate laws
3. 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 local judge may interpret the meaning of a bankruptcy clause differently than a judge in another state.

Bankruptcy Attorney Consultation

Bankruptcy laws are complicated. It is important that you discuss your bankruptcy case with an experienced lawyer to ensure that you are aware of all of your options and the implications of those options. The NJ bankruptcy attorneys at Manchel New Jersey Bankruptcy Law 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.