What You Need to Know About Bankruptcy in New Jersey Before Filing
Filing for bankruptcy can be a daunting process, especially in New Jersey, where specific laws and regulations apply. Understanding what to expect can significantly ease the journey. This article outlines essential information you need to know before filing for bankruptcy in New Jersey.
Types of Bankruptcy in New Jersey
In New Jersey, individuals typically file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7, also known as liquidation bankruptcy, allows you to discharge unsecured debts such as credit cards and medical bills. However, certain assets may be liquidated to pay creditors. On the other hand, Chapter 13 bankruptcy enables you to create a repayment plan to pay off your debts over three to five years, allowing you to keep more of your assets.
Eligibility Requirements
To qualify for Chapter 7 bankruptcy in New Jersey, you must pass the means test. This test compares your income to the median income for a household of your size in New Jersey. If your income is below the median, you may qualify for Chapter 7. If it is above, you may need to file for Chapter 13. For Chapter 13, you must have a regular income and your unsecured debt must be less than $465,275, while secured debts must be less than $1,395,875.
The Role of the Bankruptcy Court
Your bankruptcy case will be overseen by a bankruptcy court. In New Jersey, there are three federal court districts: Newark, Trenton, and Camden. After filing, you will be assigned a trustee who will handle your case, evaluate your assets, and negotiate with creditors.
Required Documentation
Before filing, you'll need to gather extensive documentation, including but not limited to:
- Income statements (pay stubs, tax returns)
- Bank statements
- Information on all debts (creditors, amounts owed)
- Property holdings (real estate, vehicles)
Completing a credit counseling course from an approved agency is also mandatory within 180 days preceding your filing.
The Filing Process
The actual filing involves submitting various forms to the court, outlining your financial situation. This includes the bankruptcy petition, schedules of assets and liabilities, and a statement of financial affairs. Once filed, an automatic stay takes effect, preventing creditors from pursuing collections.
Impacts on Credit Score
Filing for bankruptcy will impact your credit score significantly. A Chapter 7 bankruptcy remains on your credit report for ten years, while Chapter 13 stays for seven years. Despite the long-term effects, many individuals find that rebuilding credit afterwards is possible by making timely payments and obtaining secured credit cards.
Exemptions in New Jersey
New Jersey offers exemptions that allow you to keep certain assets during bankruptcy. These can include:
- Homestead exemption for your primary residence
- Personal property exemptions (clothing, household goods)
- Retirement accounts, up to specific limits
- Tools necessary for your job
Understanding these exemptions helps to protect your assets while navigating through bankruptcy.
Legal Assistance
Given the complexities of bankruptcy law, hiring a qualified attorney can be crucial. A specialized bankruptcy attorney can guide you through the process, ensure that you meet all necessary requirements, and help maximize asset retention.
Conclusion
Filing for bankruptcy in New Jersey is a significant decision with long-lasting implications. Understanding the types of bankruptcy, eligibility requirements, and overall process is essential for making informed choices. Consider seeking legal assistance to navigate this complex landscape effectively.