How to Qualify for Chapter 7 Bankruptcy in New Jersey

Qualifying for Chapter 7 bankruptcy in New Jersey involves understanding the specific eligibility criteria set forth under federal and state laws. This type of bankruptcy allows individuals to eliminate most unsecured debts, providing a fresh financial start. Below are the key factors to consider when evaluating your qualification for Chapter 7 bankruptcy.

1. Means Test

The first step in qualifying for Chapter 7 bankruptcy is passing the means test. This test determines whether your income is low enough to qualify. In New Jersey, your average monthly income is compared to the median income for a household of your size in the state. If your income is below the median, you automatically qualify.

If your income exceeds the median, you will need to calculate your disposable income by considering your allowed expenses. If the result shows that you have less than a certain amount of disposable income, you may still qualify for Chapter 7 bankruptcy.

2. Residency Requirement

To file for Chapter 7 in New Jersey, you must have been a resident of the state for at least 91 days prior to filing. This requirement ensures that only those who have a genuine connection to New Jersey can seek bankruptcy relief under its jurisdiction.

3. Credit Counseling

Before filing for bankruptcy, you must complete a credit counseling course from an approved agency. This course typically takes about 60 to 90 minutes and covers options for managing your debt and helps to ensure that bankruptcy is the most appropriate choice for your financial situation. Proof of completion must be filed with your bankruptcy petition.

4. Prior Bankruptcy Filings

Your eligibility for Chapter 7 also depends on your prior bankruptcy filings. If you have previously filed for Chapter 7 and received a discharge within the last eight years, you cannot file again. If you filed for Chapter 13, you must have completed the repayment plan to qualify for Chapter 7.

5. Governing Debts

Consider what debts you seek to discharge through Chapter 7 bankruptcy. It is essential to remember that while many unsecured debts can be eliminated, certain obligations like student loans, child support, and tax debts may not be discharged. Understanding which debts are eligible helps you make informed decisions about filing.

6. Property Exemptions

New Jersey has specific property exemption laws that protect certain assets from being liquidated during bankruptcy. Familiarizing yourself with these exemptions will help you understand what property you can keep while still discharging debts. Key exemptions may include a portion of equity in your home, vehicle exemptions, and personal property allowances.

7. Consult with a Bankruptcy Attorney

Given the complexities involved in filing for bankruptcy, consulting with a qualified bankruptcy attorney in New Jersey is highly recommended. An attorney can guide you through the process, ensure that all filings are completed accurately, and represent your interests throughout the bankruptcy proceedings.

In conclusion, qualifying for Chapter 7 bankruptcy in New Jersey requires passing the means test, meeting residency requirements, successfully completing credit counseling, considering prior bankruptcy filings, understanding dischargeable debts, and being aware of property exemptions. With the assistance of a knowledgeable attorney, you can navigate the process more effectively and make the best decisions for your financial future.