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 are considering filing for bankruptcy in New Jersey (NJ), it is crucial to understand the process and requirements involved. This article will guide you through the steps of filing for bankruptcy in NJ, providing you with the necessary information to navigate this legal procedure successfully.
Types of Bankruptcy
Before diving into the process, it is essential to understand the different types of bankruptcy available in NJ. The most common types are Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 allows individuals and businesses to eliminate most of their unsecured debts, such as credit card debt and medical bills. However, certain assets may be sold to repay creditors.
Chapter 13 Bankruptcy: Chapter 13 bankruptcy is a reorganization bankruptcy that allows individuals with a regular income to create a repayment plan to pay off their debts over a period of three to five years. This type of bankruptcy is suitable for individuals who have a steady income and want to keep their assets.
To file for bankruptcy in NJ, you must meet certain eligibility requirements. These requirements vary depending on the type of bankruptcy you are filing for.
Chapter 7 Bankruptcy: To qualify for Chapter 7 bankruptcy, you must pass the means test. This test compares your income to the median income in NJ for a household of your size. If your income is below the median, you are eligible to file for Chapter 7 bankruptcy. If your income is above the median, you may still be eligible based on your disposable income and other factors.
Chapter 13 Bankruptcy: There are no income restrictions for Chapter 13 bankruptcy. However, you must have a regular income and be able to create a feasible repayment plan to qualify.
The Filing Process
1. Credit Counseling: Before filing for bankruptcy, you must complete credit counseling from an approved agency within 180 days. This counseling session will help you understand your financial situation and explore alternatives to bankruptcy.
2. Prepare the Necessary Documents: Gather all the relevant financial documents, including income statements, tax returns, a list of assets and liabilities, and a detailed list of your creditors.
3. File the Bankruptcy Petition: Submit the necessary forms to the bankruptcy court, including the bankruptcy petition, schedules, and statements. These forms provide detailed information about your financial situation and the type of bankruptcy you are filing for.
4. Automatic Stay: Once your bankruptcy petition is filed, an automatic stay goes into effect, which prohibits creditors from taking any collection actions against you. This provides immediate relief from creditor harassment, wage garnishment, and foreclosure.
5. Meeting of Creditors: Approximately 30 days after filing, you will attend a meeting of creditors, also known as a 341 meeting. During this meeting, the bankruptcy trustee and your creditors have the opportunity to ask you questions about your financial affairs.
6. Financial Management Course: After the meeting of creditors, you must complete a financial management course from an approved agency. This course aims to provide you with the necessary tools to manage your finances better in the future.
7. Discharge of Debts: If you have filed for Chapter 7 bankruptcy, your eligible debts will be discharged approximately 60-90 days after the meeting of creditors. In Chapter 13 bankruptcy, you will begin making payments according to your repayment plan, which typically lasts three to five years.
Filing for bankruptcy in NJ can be a complex process, but understanding the steps involved can help you navigate it successfully. Whether you are considering Chapter 7 or Chapter 13 bankruptcy, it is crucial to meet the eligibility requirements and gather all the necessary documents. Remember to complete credit counseling, file the bankruptcy petition, and attend the meeting of creditors. By following the proper procedures, you can achieve a fresh financial start and relief from overwhelming debt.
– United States Courts: www.uscourts.gov
– New Jersey Bankruptcy Court: www.njb.uscourts.gov
– Legal Services of New Jersey: www.lsnj.org