Bill Text: NJ A3513 | 2024-2025 | Regular Session | Introduced
Bill Title: Increases debt execution exemption amounts for household goods, establishes for persons in debt homestead, bank account, and disposable earnings exemptions, and caps medical debt interest rate.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-02-05 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A3513 Detail]
Download: New_Jersey-2024-A3513-Introduced.html
Sponsored by:
Assemblyman HERB CONAWAY, JR.
District 7 (Burlington)
SYNOPSIS
Increases debt execution exemption amounts for household goods, establishes for persons in debt homestead, bank account, and disposable earnings exemptions, and caps medical debt interest rate.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning debt executions, amending N.J.S.2A:17-19 and supplementing Title 2A of the New Jersey Statutes and Title 31 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. 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 or $25,000 for a debtor with a physical disability, 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. In addition to any other funds exempt under this section, $5,000 in cash, or in a deposit account or other account of the debtor, 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 by 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 $5,000. If the judgment debtor has grounds to claim that more than $5,000 is exempt, the judgment debtor is entitled to file a petition in a court of competent jurisdiction to that effect. The exemption described in this subsection shall be adjusted annually beginning on first day of January of each successive year following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) by the increase in the cost of living, which shall be measured by the percentage increase, as of August of the previous year, of the consumer price index or its successor index as published by the United State Department of Labor, the federal Bureau of Labor Statistics, or its successor agency, with the amount of the exemption rounded up to the nearest $100.
c. Except as provided in subsection d. of this section, the maximum part of the disposable earnings of a debtor for any workweek that is subject to execution or civil process may not exceed 10 percent of disposable earnings for that week or the amount by which disposable earnings for that week exceed 60 times the applicable minimum hourly wage in effect at the time the earnings are payable, whichever is less. The applicable minimum hourly wage is the minimum wage required by federal, State, or local law, whichever is highest.
d. The exemptions provided in subsection c. of this section shall not apply in the case of any order for the support of any person. In such case, one-half of the disposable earnings of a debtor for any pay period is exempt from execution or civil process.
e. The exemptions provided in this section shall not apply to the orders of any court of bankruptcy under 11 U.S.C. s.1301 et al. or any debt due for any State or federal tax.
f. As used in this section, "disposable earnings" means that remaining portion of a debtor's wages, salary, or compensation for the debtor's personal services, including bonuses and commissions, or otherwise, and includes payments pursuant to a pension or retirement program or deferred compensation plan, after deducting from the earnings those amounts required by law to be withheld.
(cf: P.L.1973, c.162, s.1)
2. (New section) a. Any person aged 18 or over, married or single, who resides within the State may hold as a homestead exempt from attachment, execution, and forced sale, not exceeding $400,000 in value, any one of the following:
(1) the person's interest in real property upon which exists a dwelling house in which the person resides;
(2) the person's interest in one condominium or cooperative in which the person resides; 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.
b. Only one homestead exemption may be held by a married couple or a single person under this section. The value as specified in this section refers to the equity of a single person or married couple. If a married couple lived together in a dwelling house, a condominium or cooperative, or a manufactured home and are then divorced, the total exemption allowed for that residence to either or both persons shall not exceed $400,000 in value.
c. The homestead exemption, not exceeding the value provided for in subsection a. of this section and as further adjusted pursuant to subsection d. of this section, automatically attaches to the person's interest in identifiable cash proceeds from the voluntary or involuntary sale of the property. The homestead exemption in identifiable cash proceeds continues for 18 months after the date of the sale of the property 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 a person under this section.
d. The homestead exemption provided by this section shall be adjusted annually beginning on January 1, 2024 and thereafter on January 1 of each successive year by the increase in the cost of living. The increase in the cost of living shall be measured by the percentage increase as of August of the immediately preceding year over the level as of August of the previous year of the consumer price index (all urban consumers, United States city average for all items) or its successor index as published by the United States Department of Labor, the federal Bureau of Labor Statistics, or its successor agency, with the amount of the exemption rounded up to the nearest $100.
3. (New section) a. The maximum interest rate on medical debt shall be the lesser of the following:
(1) the annual rate equal to the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date when the consumer was first provided with a bill; or
(2) three percent a year.
The maximum interest rate provided pursuant to this subsection shall also apply to any judgments on medical debt.
b. As used in this section:
"Health care services" means a health care service as defined pursuant to section 2 of P.L.1971, c.136 (C.26:2H-2).
"Medical debt" means a loan, indebtedness, or other obligation arising directly from the receipt of health care services or of medical products or devices.
4. This act shall take effect on the 90th day next following enactment.
STATEMENT
This bill increases the debt execution exemption amounts for household goods, establishes for persons in debt homestead, bank account, and disposable earnings exemptions, and places a cap on the medical debt interest rate.
Under the bill, any person aged 18 or over, married or single, who resides within the State may hold as a homestead exempt from attachment, execution, and forced sale, not exceeding $400,000 in value any of the following: an interest in real property upon which exists a dwelling house in which the person resides; an interest in a condominium or cooperative in which the person resides; or a manufactured home, including the land on which the manufactured home is situated. The homestead exemption will automatically attach to the person's interest in identifiable cash proceeds from the voluntary or involuntary sale of the property. The homestead exemption in identifiable cash proceeds continues for 18 months after the date of the sale of the property 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 a person under the bill.
The bill additionally increases the total value of household goods that are exempt from debt collection from $1,000 to $15,000 or $25,000 for a debtor with a physical disability. The bill also provides for an exemption from garnishment of up to $5,000 for cash held in a deposit account or other account of the debtor and limits the amount of disposable earnings subject to execution to no more than 10 percent of disposable earnings for that week or the amount by which disposable earnings for that week exceed 60 times the applicable minimum hourly wage in effect at the time the earnings are payable, whichever is less. For the purpose of this bill, "disposable earnings" means the remaining portion of a debtor's wages, salary, or compensation for the debtor's personal services, including bonuses and commissions, or otherwise, and includes payments pursuant to a pension or retirement program or deferred compensation plan, after deducting from the earnings those amounts required by law to be withheld.
Finally, the bill places a cap on the interest rate for medical debt. The maximum interest rate on medical debt will be the lesser of the following:
(1) the annual rate equal to the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date when the consumer was first provided with a bill; or
(2) three percent a year.
