How to File for Bankruptcy When You’re Self-Employed in New Jersey
Filing for bankruptcy can be a complex process, especially when you are self-employed. If you're a self-employed individual in New Jersey facing overwhelming debt, understanding how to navigate the bankruptcy process is crucial. This guide outlines the steps you need to take and provides valuable insights into the types of bankruptcy available to you.
Understanding Bankruptcy Types for Self-Employed Workers
In New Jersey, self-employed individuals primarily have two options for filing bankruptcy: Chapter 7 and Chapter 13. Each type has different implications for your assets and debt repayment responsibilities.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy allows for the discharge of most unsecured debts, providing you with a fresh start. However, to qualify, you must pass a means test, which assesses your income and expenses. If your income is below the median income for New Jersey, you can file for Chapter 7. It's important to keep in mind that some assets may be liquidated to pay off creditors during this process.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, on the other hand, is designed for those who have a regular income and allows you to reorganize your debts. In this scenario, you create a repayment plan lasting three to five years. This option can be beneficial for self-employed individuals who have assets they wish to retain, as you won't necessarily have to liquidate property.
Steps to File for Bankruptcy in New Jersey
1. Assess Your Financial Situation: Gather financial documents including income statements, tax returns, and a list of debts. This information will be essential in determining the appropriate bankruptcy chapter.
2. Credit Counseling: Before filing, you must complete a credit counseling course from an approved provider. This is a requirement and usually takes about an hour.
3. Complete Bankruptcy Forms: Prepare your bankruptcy petition and schedules. This paperwork includes details about your income, expenses, assets, and debts. It's advisable to consult with a bankruptcy attorney to ensure accuracy and compliance with legal standards.
4. File Your Petition: Submit your completed bankruptcy forms to the U.S. Bankruptcy Court for the District of New Jersey. Be sure to pay the filing fee, unless you qualify for a fee waiver.
5. Attend the 341 Meeting: After filing, you will be required to attend a meeting of creditors, known as the 341 meeting. During this meeting, you will answer questions regarding your financial situation and the information in your bankruptcy petition.
Post-Bankruptcy Considerations
Once your bankruptcy case is concluded, you will receive a discharge of debts in Chapter 7 or have a repayment plan confirmed in Chapter 13. It’s essential to rebuild your credit post-bankruptcy by making timely payments on remaining debts and considering financial counseling. This step will help you regain financial stability and improve your credit score over time.
Conclusion
Filing for bankruptcy as a self-employed individual in New Jersey is a significant decision that requires careful planning and consideration. Ensuring you understand the processes involved and seeking professional guidance can help you navigate this challenging time efficiently. Remember, bankruptcy is a tool for financial recovery, allowing you to move forward and rebuild your financial future.