New Jersey asset protection: a strong charging order statute the internet keeps describing wrong

Search for New Jersey asset protection and you will be told that a creditor holding a judgment against you can foreclose on your LLC interest and sell it. Law firm pages published in 2025 and 2026 still say it.

New Jersey removed that remedy from the statute in 2013. The current text says the charging order is the sole remedy of a judgment creditor, who has no right under the LLC act or any other state law to interfere with management, force dissolution, or seek a foreclosure sale. New Jersey is a strong charging-order state, roughly on par with Texas and Wyoming, and it has been for more than a decade while its reputation stayed where the old statute left it.

The offsetting fact is severe and rarely mentioned in the same breath. New Jersey has no homestead exemption. None at all.

What the statute actually says

The charging order protection page explains the toll booth. New Jersey’s version is one of the strongest in the country.

New Jersey’s charging order is the sole remedy, and the statute bars foreclosure, management interference, and forced dissolution by name.

N.J.S.A. 42:2C-43 gives a judgment creditor a charging order against a member’s transferable interest and limits the creditor to the rights of an assignee. Then it forecloses the alternatives in a single sentence: the charging order is the sole remedy of a judgment creditor, who has no right, under the LLC act or any other state law, to interfere with the management or force dissolution of the company, or to seek an order requiring a foreclosure sale of the transferable interest. The reach of that phrase, any other state law, is the same broad shutdown Texas uses.

New Jersey adopted the uniform LLC act in 2012, and the uniform version included the standard foreclosure remedy. A 2013 amendment stripped it out. Commentary written before that amendment described the foreclosure remedy correctly for its time; the problem is that the same description is still being republished today. If you are relying on an article that says New Jersey permits foreclosure on a charging order, check its date, and then check the statute.

The sentence New Jersey wrote that most states leave out

One more clause deserves attention, because it is unusually candid drafting.

New Jersey wrote the federal bankruptcy limit into its own charging order statute.

The section closes by providing that nothing in it affects the rights of a member’s judgment creditor under federal bankruptcy or reorganization laws. Most states say nothing about this and leave owners to discover it in a bankruptcy courtroom. New Jersey put the limit in the text. It confirms the point this site makes on every state page: state charging order protection, however strong, stops at the federal courthouse, and a bankruptcy trustee is not bound by it.

Piercing the veil

The attack from the other direction, reaching the owner for the company’s debts, runs on New Jersey’s standard alter ego analysis: a plaintiff must show that the owner so dominated the company that it had no separate existence, and that respecting the separation would work a fraud or injustice. The piercing the veil page covers what actually sinks owners, and the answer in New Jersey is the answer everywhere: mixed money and missing records, not skipped meetings.

There is no homestead exemption

Here is the inversion that defines New Jersey.

New Jersey protects your LLC interest about as well as any state and your home equity not at all.

New Jersey provides no state homestead exemption. Its state exemption list is minimal: roughly $1,000 of personal property and stock, roughly $1,000 of household goods and furniture, clothing, burial plots, most earned but unpaid wages, annuity proceeds to $500 a month, life insurance where the debtor is not the insured, and public pensions. Against Florida’s and Texas’s unlimited homesteads, or even New York’s tiered figures, that is close to nothing.

Two things soften it, and both matter enormously in practice.

Because New Jersey never opted out of the federal bankruptcy exemptions, its debtors can choose the federal scheme instead.

New Jersey debtors may elect either the state exemptions or the federal bankruptcy exemptions under 11 U.S.C. § 522, with no mixing between the two. Because the federal list includes a homestead exemption, reported at roughly $31,575 for an individual and about $63,150 for a married couple filing jointly, most New Jersey filers choose federal. The practical homestead for a New Jersey debtor is the federal one.

For a married couple, entireties ownership does the work the missing homestead would have done.

New Jersey exempts the survivorship interest of a spouse in property held as tenants by the entirety from the creditors of the other spouse. The exception is federal: United States v. Craft lets a federal tax lien attach to entireties property despite state protection, covered in the entireties guide. For a married New Jersey homeowner, that is the real protection: a creditor of one spouse alone faces a serious obstacle in reaching the marital home. Whether New Jersey extends entireties treatment to personal property, including an LLC interest, is a different question and one this page does not answer, so do not assume a jointly held membership interest carries the same shield.

New Jersey has no domestic asset protection trust statute. The trusts and LLCs page covers what trusts do and do not do; in New Jersey they are continuity and estate tools, not creditor armor.

The bottom line

New Jersey’s charging order is the sole remedy by statute, and foreclosure, management interference, and forced dissolution are barred by name.

That has been the law since a 2013 amendment, and a great deal of published analysis still describes the repealed version.

The statute itself says it does not affect a creditor’s rights under federal bankruptcy law, which is the limit every state shares and few admit.

New Jersey has no state homestead exemption, and its state exemption list is among the smallest in the country.

New Jersey never opted out of the federal bankruptcy exemptions, so most filers elect the federal scheme and its homestead.

For married couples, tenancy by the entireties protects the home from a creditor of one spouse, which is the state’s real substitute for a homestead.

What this page does not cover

This page is about how creditors reach you in New Jersey. The default rules that govern when your operating agreement is silent, including the equal-shares split, are on the governance page. Taxes, the per-member cost, and transfer fees are on the structure and cost page. Fees, forms, and deadlines are on the filing page.

Last verified July 2026.