The Legal Process of Filing for Bankruptcy in New Jersey

Filing for bankruptcy can be an overwhelming process, but understanding the legal steps involved can make it more manageable. In New Jersey, the bankruptcy process is governed by federal laws, as bankruptcy is handled in U.S. Bankruptcy Courts. Below, we break down the legal process of filing for bankruptcy in New Jersey.

Understanding the Types of Bankruptcy

Before filing, it’s crucial to know which type of bankruptcy you qualify for:

Chapter 7 Bankruptcy: Often referred to as 'liquidation bankruptcy', Chapter 7 allows individuals to eliminate most of their unsecured debts. It involves selling non-exempt assets to pay creditors.
Chapter 13 Bankruptcy: This option is for individuals with a regular income. It allows you to keep your property while paying off debts over a 3- to 5-year repayment plan.

Pre-Bankruptcy Requirements

Before you can file for bankruptcy in New Jersey, there are essential steps to take:

Credit Counseling: You must complete credit counseling from an approved agency within 180 days before filing. This course helps you understand your financial situation and explore alternatives to bankruptcy.
Gather Financial Documents: Prepare a detailed list of your debts, income, assets, and expenses. Necessary documents include tax returns, pay stubs, and bank statements.

Filing the Bankruptcy Petition

Once you have completed the required counseling and gathered necessary documents, you can file your bankruptcy petition:

Complete the Bankruptcy Forms: You will need to fill out various forms, including schedules of assets and liabilities, your income and expenses, and a statement of financial affairs.
File with the Bankruptcy Court: In New Jersey, you can file your petition with the U.S. Bankruptcy Court for the District of New Jersey. Your filing fee is generally around $335 for Chapter 7 and $310 for Chapter 13, though fee waivers are available for those who qualify.

The Automatic Stay

Once your bankruptcy petition is filed, an automatic stay goes into effect. This means most collection activities must stop, including lawsuits, wage garnishments, and creditor calls. The automatic stay provides immediate relief, allowing you time to regroup and reorganize your finances.

The Meeting of Creditors (341 Meeting)

Approximately 4-6 weeks after filing, you will attend a Meeting of Creditors, also known as the 341 Meeting. Here, you will meet with the bankruptcy trustee and creditors, who may ask questions regarding your financial situation:

Be Prepared: Bring identification, social security number, and documentation related to your bankruptcy.
Answer Truthfully: Be honest in your responses to questions; dishonesty can result in complications.

Approval and Discharge of Debts

After the Meeting of Creditors, if there are no objections and you meet all requirements, your debts will be discharged:

Chapter 7 Discharge: Typically occurs within 3-6 months after filing.
Chapter 13 Discharge: Granted upon completion of the repayment plan, which can take 3-5 years.

Post-Bankruptcy Considerations

After your bankruptcy has been discharged, it’s important to manage your finances carefully:

Rebuilding Credit: Obtain a secured credit card and make timely payments to rebuild your credit score.
Financial Planning: Consider working with a financial advisor to develop a sustainable budget and savings plan.

Consulting with a Bankruptcy Attorney

Given the complexities of bankruptcy law, consulting with a qualified bankruptcy attorney in New Jersey is advisable. They can help you navigate the process, understand your rights, and ensure all paperwork is filed correctly. A knowledgeable attorney can provide invaluable insights and improve your chances of a successful discharge.

In conclusion, while filing for bankruptcy in New Jersey involves multiple steps, understanding each phase helps demystify the legal process. By being informed and seeking professional guidance, you can achieve a fresh financial start.