How to Qualify for Bankruptcy in New Jersey

Filing for bankruptcy can be a complicated process, but understanding how to qualify for it in New Jersey can simplify your journey. Below are the essential criteria and steps to guide you through the qualification process for bankruptcy in the Garden State.

Types of Bankruptcy in New Jersey

Before determining how to qualify for bankruptcy, it's vital to know the two main types commonly filed in New Jersey: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy: This allows for the discharge of most unsecured debts, such as credit card bills and medical debts, and is generally quicker.
Chapter 13 Bankruptcy: This enables individuals to keep their property while repaying debts over three to five years under a structured plan.

Eligibility Criteria for Chapter 7 Bankruptcy

To qualify for Chapter 7 bankruptcy in New Jersey, you must meet the following requirements:

Means Test: You must pass the means test, which compares your income to the median income for a household of the same size in New Jersey. If your income is below the median, you qualify. If it's above, you'll need to demonstrate that your disposable income is insufficient to pay your debts.
Credit Counseling: Before filing, you must complete a credit counseling course from a certified agency within 180 days prior to your filing.
No Prior Bankruptcy Discharges: If you’ve received a discharge in a Chapter 7 case within the last eight years, you are ineligible.

Eligibility Criteria for Chapter 13 Bankruptcy

For Chapter 13 bankruptcy, there are specific eligibility criteria as well:

Regular Income: You must have a consistent source of income, whether it's from employment, self-employment, or other legal means.
Debt Limits: Your unsecured debts must be less than $465,275, and your secured debts must be less than $1,395,875, based on the limits set as of April 2022. These figures are updated periodically, so verify the current limits.
Credit Counseling: Similar to Chapter 7, you must complete a credit counseling course from an approved provider before submitting your petition.

Steps to Follow for Filing Bankruptcy in New Jersey

After confirming your eligibility, follow these steps for filing bankruptcy:

Gather Financial Documentation: Collect all financial documents, including income statements, bank statements, tax returns, and details of debts.
Complete the Necessary Forms: Complete the required bankruptcy forms, which detail your income, expenses, assets, and liabilities. You can obtain these from the U.S. Courts website or through legal assistance.
File with the Bankruptcy Court: Submit your completed paperwork to the U.S. Bankruptcy Court for the District of New Jersey. There is a filing fee, which varies depending on the type of bankruptcy.
Attend the Meeting of Creditors: After filing, you will have a meeting with your creditors and a bankruptcy trustee, where you may answer questions regarding your financial affairs.
Complete Financial Management Course: Before your debts are discharged, you must complete a financial management course.

Conclusion

Qualifying for bankruptcy in New Jersey is a multifaceted process involving eligibility criteria, various steps, and careful preparation. Whether you choose Chapter 7 or Chapter 13, understanding these requirements ensures you can navigate your financial difficulties effectively. Always consider consulting with a qualified bankruptcy attorney to get personalized advice tailored to your specific financial situation.