Understanding Bankruptcy in New Jersey
Bankruptcy in New Jersey is a legal process designed to help individuals and businesses eliminate or restructure debt under the protection of the federal court system. For people overwhelmed by financial obligations, bankruptcy provides a structured path to relief and a chance to rebuild.
Two Primary Options for Individuals
Chapter 7: Debt Elimination
Chapter 7 bankruptcy allows the elimination of most unsecured debts, including credit card balances, medical bills, and personal loans. The process is relatively quick, typically concluding within three to six months. Eligibility is determined by the means test, which compares your household income to the state median.
Chapter 13: Debt Repayment
Chapter 13 bankruptcy enables individuals with regular income to repay debts over a three- to five-year period while retaining assets like homes and vehicles. This option is particularly valuable for homeowners facing foreclosure or individuals who do not qualify for Chapter 7 under the means test.
The Filing Process
Step 1: Credit Counseling
Before filing, you must complete a credit counseling course from an approved agency. This requirement ensures that you have explored alternatives to bankruptcy.
Step 2: Filing the Petition
Your attorney prepares and files a bankruptcy petition with the court, along with detailed schedules of your assets, liabilities, income, expenses, and recent financial transactions.
Step 3: Automatic Stay
Upon filing, an automatic stay takes effect immediately, halting all collection activities, wage garnishments, lawsuits, and foreclosure proceedings.
Step 4: Trustee Review
A court-appointed trustee reviews your financial disclosures and conducts a meeting of creditors (the 341 meeting) where you answer questions about your finances under oath.
Step 5: Debt Resolution
In Chapter 7, qualifying debts are discharged within months. In Chapter 13, you follow a court-approved repayment plan for three to five years, after which remaining eligible debts are discharged.
Why Legal Representation Matters
Filing for bankruptcy involves complex legal and financial considerations. An experienced bankruptcy attorney can determine which type of bankruptcy best fits your situation, maximize the protection of your assets through available exemptions, ensure all paperwork is accurate and complete, represent you at hearings and meetings, and help you avoid common filing mistakes that can delay or jeopardize your case.
Frequently Asked Questions
Will Everyone Know I Filed for Bankruptcy?
Bankruptcy filings are public records, but in practice, they are not widely published or easily found by casual observers.
Will I Lose My Home?
In many cases, no. New Jersey’s exemptions protect home equity up to specified limits, and Chapter 13 specifically allows you to keep your home while catching up on missed payments.
How Long Does Bankruptcy Stay on My Credit Report?
A Chapter 7 bankruptcy remains on your credit report for 10 years. A Chapter 13 bankruptcy remains for 7 years. However, many filers begin rebuilding credit successfully well before these periods expire.
Take the First Step
Simon Law Group helps individuals throughout New Jersey understand their bankruptcy options and make informed decisions about their financial future.
To request a consultation, call (800) 709-1131 or use the contact form. The intake team will review the request before any consultation is confirmed.