New Jersey Bankruptcy Laws

How to File Bankruptcy in New Jersey

Bankruptcy in New Jersey begins with gathering the correct paperwork. Since the 2005 Bankruptcy Act this paperwork has been more extensive and includes many more documents. Some of the necessities include motor vehicle titles, real estate titles, tax return information from the past two years, purchasing information for large items in the past six months, personal expenses, personal income, and living arrangements.

These papers can be gathered through an attorney or by oneself. The information then is filed with an attorney through an electronic database in a personal meeting, through a do-it-yourself database, or through a personal attorney using an electronic database. All the necessary paperwork is submitted electronically to insure speed and efficiency.

A Means Test

Before a petition is completed, or even begun, an individual must submit to a bankruptcy means test through the state of New Jersey. This test will compare an individual’s income, personal expenses, outstanding debts, and living arrangements to that of all other New Jersey citizens.

If an individual’s score falls above the calculated median of the state, then he or she is eligible for Chapter Thirteen bankruptcy. If an individual’s score falls below the calculated median for New Jersey, then he or she is eligible for Chapter Seven bankruptcy. Other kinds of bankruptcy are available for family-owned farms and corporations.

Chapter Thirteen Bankruptcy

Chapter Thirteen bankruptcy is for consumers who have the resources to pay off creditors by using their own income. The bankruptcy court will designate a personal payment plan for the individual’s specific needs. This payment plan will be based on his or her income, expenses, and debts.

The plan will not exceed five years and will not be less than three years. New Jersey states that if an individual is able to pay a minimum of one hundred sixty-six dollars a month on his or her debts, he or she is eligible for Chapter Thirteen bankruptcy.

Chapter Seven Bankruptcy

Chapter Seven bankruptcy is for consumers who cannot pay a minimum of one hundred dollars a month on their debts. After a petition is accepted, the court will designate a trustee to the case.

The trustee will be responsible liquidating any non-exempt property and using the obtained commission to pay off creditors. The non-exempt property will be sold for the highest value possible. This entire process can take up to six months or as few as three months for a single case. Once a petition has been granted all pending foreclosures will be halted.

Exempt Property

New Jersey states that those filing for bankruptcy have the right to choose federal exemptions or New Jersey exemptions for Chapter Seven bankruptcy. New Jersey exemptions include categories of different forms of property and values. These categories include insurance, miscellaneous, pensions, personal property, public benefits, and wages.

Other states may also have homestead categories and wild card categories. Some of the exempt property can include business partnerships, teacher pensions, life insurance, burial plots, clothing, disability benefits, furniture and goods under one thousand dollars, and workers’ compensation.

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