Introduction
Filing for bankruptcy can be a complex and overwhelming process, but it can provide individuals and businesses with a fresh start and relief from overwhelming debt. If you reside in New Jersey and are considering filing for bankruptcy, it’s essential to understand the process and requirements specific to the state. This article will guide you through the steps to file bankruptcy in NJ, ensuring you have the necessary information to make informed decisions.
Types of Bankruptcy
Before diving into the process, it’s important to understand the different types of bankruptcy available. In the United States, the most common types of bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 involves the sale of non-exempt assets to repay creditors. This type of bankruptcy is suitable for individuals with limited income and significant debt.
Chapter 13 Bankruptcy: Chapter 13 bankruptcy allows individuals with a regular income to create a repayment plan to settle their debts over a period of three to five years. This type of bankruptcy is ideal for those who have a steady income and want to keep their assets while repaying their debts.
Eligibility for Bankruptcy in NJ
To file for bankruptcy in New Jersey, you must meet certain eligibility criteria. These criteria include:
1. Residency: You must have lived in New Jersey for at least 180 days before filing for bankruptcy.
2. Credit Counseling: Before filing, you must complete credit counseling from an approved agency within 180 days.
3. Means Test: To qualify for Chapter 7 bankruptcy, you must pass the means test, which compares your income to the median income in New Jersey. If your income is below the median, you are eligible for Chapter 7. If it exceeds the median, you may still qualify based on your expenses and other factors.
The Bankruptcy Filing Process
Once you meet the eligibility requirements, you can proceed with the bankruptcy filing process. Here are the general steps involved:
1. Collect Financial Documents: Gather all relevant financial documents, including tax returns, bank statements, pay stubs, and a list of your assets and liabilities.
2. Complete Bankruptcy Forms: Fill out the necessary bankruptcy forms, including the petition, schedules, and statements of financial affairs. These forms require detailed information about your income, expenses, assets, and debts.
3. File the Forms: Submit the completed forms to the New Jersey bankruptcy court. You will also need to pay the required filing fee, which varies depending on the type of bankruptcy you are filing.
4. Automatic Stay: Once your forms are filed, an automatic stay goes into effect, providing immediate relief from creditor actions, such as collection calls and wage garnishments.
5. Attend the Meeting of Creditors: Approximately 30 to 45 days after filing, you will attend a meeting of creditors, also known as a 341 meeting. During this meeting, the bankruptcy trustee and creditors may ask you questions about your financial situation.
6. Financial Management Course: After the meeting of creditors, you must complete a financial management course from an approved agency within 60 days.
7. Discharge of Debts: If you are filing for Chapter 7 bankruptcy, your eligible debts may be discharged approximately 60 to 90 days after the meeting of creditors. In Chapter 13 bankruptcy, you will begin making payments according to your repayment plan.
Conclusion
Filing for bankruptcy in New Jersey can be a complex process, but understanding the steps involved and meeting the eligibility criteria can help you navigate through it successfully. It’s important to consult with a bankruptcy attorney who can provide personalized guidance based on your specific financial situation.
Remember, bankruptcy should be considered as a last resort, and exploring other debt relief options, such as debt consolidation or negotiation, is advisable before making a final decision.
References
– United States Courts: www.uscourts.gov
– United States Bankruptcy Court – District of New Jersey: www.njb.uscourts.gov
– Legal Services of New Jersey: www.lsnjlaw.org
