You are looking to file bankruptcy in New Jersey. The most important things to understand are the process, qualification, costs, risk of losing belongings, pros and cons, and alternatives. The purpose of this article is to provide this information and personalized information based on your unique situation from our bankruptcy calculators.
Firstly, you need to know that bankruptcy is a legal debt relief option. It can help you eliminate debt, protect you from creditors, and give you a fresh start. In fact, in New Jersey, there were 11,754 from for the past year ending June 30th, 2021. Bankruptcy can even allow you to save for retirement.
You will notice that steps 1-7 below are to help you research whether and how to file for bankruptcy in New Jersey. Steps 8-15 are the actual bankruptcy process.
The rules and logistics of filing bankruptcy in New Jersey are different than in other states. As such, it’s important to understand exemptions, qualification, and attorney costs in New Jersey.
Chapter 7 and Chapter 13 bankruptcy are the most common consumer bankruptcy filed in the United States. You need to know the difference because one chapter is more expensive and also often takes much longer.
A Chapter 7 bankruptcy is referred to as liquidation bankruptcy. In many cases, bankruptcy filers do not lose their home or vehicle by using bankruptcy exemptions. We will cover how your belongings may be at risk below.
Here’s what you need to know about filing Chapter 7 bankruptcy in New Jersey.
Here’s what you need to know about filing Chapter 13 bankruptcy in New Jersey.
The goal of bankruptcy is to get relief from your debt. As such, it can be helpful to understand the types of debt that can be eliminated when filing for bankruptcy.
Many debts can be discharged. This includes unsecured credit cards, medical debts, personal loans, old utility bills, judgment debts, and old lease payments
Other debts cannot be discharged. This includes back alimony or child support, debts owed to the government, judgments related to DUI accidents, tax debts, and administrative costs or restitution
Tax debt receives special treatment in Chapter 13. You may not know how much debt you have. As such, you can access a free credit report annually, thanks to the US government. This can help you estimate how much debt would be eliminated by filing for bankruptcy.
As you can imagine, many people want to keep their home, car, cash, etc. when filing bankruptcy.
You need to understand the bankruptcy exemptions in New Jersey. The bankruptcy exemptions are complex because some states allow you to choose between state and federal exemptions when filing bankruptcy. For example, check out the New Jersey homestead exemption.
As such, we created this New Jersey bankruptcy exemptions calculator to simplify the information. This free calculator helps you estimate whether your belongings are at risk when filing bankruptcy in New Jersey.
As stated above, you often have to qualify to file Chapter 7 bankruptcy. Qualification is based on US means testing. The means testing is based on the household income and size of the household for New Jersey.
The bankruptcy means test in New Jersey often changes every 6 months. To help, we built the following bankruptcy means test calculator to help you estimate qualification, understand the cost and compare bankruptcy alternatives.
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There are many bankruptcy alternatives to consider. We will cover the two most common alternatives, but you can find more in our bankruptcy alternatives article. As a reference, filing Chapter 7 bankruptcy is often the least expensive and the shortest.
Debt settlement is also known as debt negotiation, debt relief, or a debt consolidation program (not to be confused with a loan). In debt settlement, a company or you will negotiate with your creditors for a lower amount. You can save money and avoid filing bankruptcy. You may also be exposed to lawsuits, so it’s important to understand which creditors are likely to sue. A debt settlement programs often last 2 - 5 years.
Debt management is also known as credit counseling. In debt management, a company will negotiate with your creditors for a lower percentage interest rate. You can save money on interest and avoid filing bankruptcy. Debt management can be more expensive than debt settlement and Chapter 13. Debt management programs often last 5 years.
Did you know that some people file for bankruptcy without an attorney? Many people prefer using a bankruptcy lawyer given the complexity of filing bankruptcy, but it is possible to often file Chapter 7 bankruptcy without an attorney. Filing Chapter 13 without an attorney may be much more challenging.
When you file for bankruptcy, you need to understand the cost and affordability of bankruptcy. The costs primarily consist of the filing fee (a fixed cost) and the attorney fee (a variable cost if you decide to hire an attorney). Firstly, most attorneys offer payment plans. Some also offer $0 down payment options. The cost of the attorney can be variable based on such factors like your location (Example: Newark vs. Jersey City) and the difficulty of the case.
We built this New Jersey attorney fee calculator to help you estimate costs based on your specific zip code.
If you cannot afford a payment plan, you may also look at the legal aid options in your state and also how the filing fee waiver works.
There are certain situations where you could get help through legal aid. Please note that each legal aid may have criteria set for who they will help. Here are legal aid option(s) in New Jersey.
There’s a filing fee to file bankruptcy. You can check the New Jersey filing fee waiver requirements to see whether you may be eligible for the filing fee waiver.
Once you understand the cost, you can now determine whether to hire an attorney to file bankruptcy. Most attorneys will send you a retainer agreement that will outline the terms of the engagement. You will most likely need to submit information like pay stubs and tax returns for them to file the bankruptcy petition.
You may want to be aware of these 5 things when hiring a bankruptcy attorney.
You are ready to actually file bankruptcy in New Jersey once you understand your options and have decided whether to file bankruptcy with an attorney
You have to take two mandatory credit counseling courses to complete your Chapter 7 bankruptcy. The Chapter 7 trustee may request the certificate of completion in the meeting of creditors. The first course is a pre-bankruptcy course, and the second is the pre-discharge course.
If you are filing with an attorney, your attorney may have suggestions for both the credit counseling and debt education course. If not, you can see the list of approved credit counseling courses in New Jersey.
There are also local rules and forms that may be specific to New Jersey. If you are filing bankruptcy with an attorney, they should help guide you through the local requirements. For example, see the local rules in New Jersey based on the district:
A bankruptcy trustee is assigned to your bankruptcy case to review the paperwork and look for non-exempt belongings that you may own. You have to submit such forms as a recent tax return to the trustee. If you have non-exempt belongings, the trustee may manage the sale and liquidation of those belongings.
See the Chapter 7 and Chapter 13 trustees in New Jersey for bankruptcy district, name and contact information. As a Chapter 13 bankruptcy is much longer, you may have more interaction with the Chapter 13 trustee or someone from his/her office.
The 341 meeting of creditors and the hearing where all debtors must attend in a bankruptcy proceeding. The meeting often occurs between 21 and 50 days after filing the petition. It generally takes 10 to 15 minutes. The meeting is a recorded conversation between the trustee, your bankruptcy attorney, and yourself about the paperwork you filed. The bankruptcy trustee will ask questions to ensure that you understand the bankruptcy process.
Creditors are notified that they may ask the debtor questions. That said, in all of the 341 meetings I have attended, I have not seen a creditor show up.
Many 341 meetings of creditors have been over the phone or over Zoom due to the pandemic. That said, you may want to see where the courthouse is in New Jersey if there are any meetings that need to take place in person. Below are the court locations for filing bankruptcy based on the bankruptcy district.
After the meeting of creditors, the bankruptcy trustee will have enough information to decide whether you will qualify for Chapter 7 bankruptcy. The trustee will look for nonexempt assets and will decide whether it’s worth it to liquidate nonexempt assets. The trustee may do this by understanding the retail value of the asset and whether it will sell.
The secured debts such as a vehicle will need to be dealt with around this point in the process. You can often reaffirm the debt as an asset, which is very common for vehicles.
You must take a second mandatory debt education course in New Jersey before filing for discharge. Once you receive the certificate of completion, your attorney or you would add that into your filing to show proof of completion.
See the list of approved debtor education courses in New Jersey. Once filed, you now just have to wait for discharge.
You often receive your bankruptcy discharge around 120 days after filing in New Jersey. This can be variable based on different factors.
Congratulations, receiving your bankruptcy discharge is a major step to restarting your financial freedom.
Unfortunately, Chapter 7 bankruptcy can negatively impact your credit and Chapter 13 can negatively impact your credit. That said, you have an opportunity to rebuild your credit shortly after bankruptcy. To assist, you can use our free credit rebuilding portal designed to help you increase your credit score by 100 points in less than 6 months.