Bankruptcy is a federal law; in such filing bankruptcy can only be done in federal court. The basic bankruptcy laws are therefore the same throughout the United States, the only variations in the State laws relating to what assets an individual debtor is allowed to keep, called "exemptions" (New Jersey exemptions are here) There is also variations in the effect of bankruptcy as different states have different durations of bankruptcy.

A bankruptcy starts with the filing in bankruptcy court of the official petition and a lengthy document called a Statement of Financial Affairs. This statement contains extensive information including a detailed list of all your Secured debts (home loans or autoloans - "secured" loans are loans with property as collateral) , Priority debts (this includes taxes), Unsecured debts, contact information for creditors, and a list of debtor assets.

It is extremely important that the Statement of Financial Affairs be completed accurately. Debts that are not listed in the statement will not be discharged at the completion of the bankruptcy proceeding. Failing to list assets in an attempt to hide them from creditors may result in serious consequences, including the denial of discharge or charges of bankruptcy fraud.

Once your Statement of Financial Affairs is filed creditors are immediately stopped from preventing to collect debts by an "automatic stay." This is designed to preserve your assets.

The bankruptcy lawyer will try and sell your unexempt assets to raise cash to pay for the bankruptcy and then to pay off creditors as much as possible with any left over monies.

Once you file your bankruptcy case any additional assets you earn are yours 100% and don't have an effect on your bankruptcy case!

The next step is the first meeting with the creditors (also a 341 meeting) Your bankruptcy lawyer will ask you questions, under oath, about your debts and assets. Seldomly, creditors will also question you.

Your creditors will have 60 days after this first 341 meeting to try and prove to the bankruptcy court that you should not qualify for bankruptcy.

It is possible your bankruptcy lawyer may ask to look over your expenses in relation to your income to see if you can pay anything to creditors.

Bankruptcy Laws New Jersey

There has been a lot of misinformation about the new bankruptcy laws. You can still file chapter 7 bankruptcy! You will have to pass extra loopholes to qualify and extra forms and paperwork to fill out, and you may be forced to file chapter 13 instead of chapter 7. However, chapter 7 is still available to the vast majority of debtors will a little extra effort! (more)

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy - also know as a straight bankruptcy - is a bankruptcy in which the debtor turns over all non-exempt assets to the bankruptcy lawyer who will then get as money cash for it as possible for distribution to the creditors. The debtor receives a discharge of all dischargeable debts - usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick "fresh start".
Federal laws provide a means test to determine if you are eligible to file for Chapter 7 Bankruptcy in New Jersey. If your income is below the median family income in New Jersey you will be eligble. If your income is higher than the average then income in the past 6 months is considered. Mortgage and other payments, taxes and child support are taken into consideration. If, after these expenses, and living expenses as laid out by the IRS national collection standards, are accounted and you can still pay a minimum $100 a month for 5 years (total of $6,000) to unsecured creditors (assets not exempt are "unsecured") you will not qualify for a Chapter 7 bankruptcy in New Jersey and your only option will be Chapter 13.

One of the main purposes of Bankruptcy Law is to give a person, who is hopelessly burdened with debt, a fresh start by wiping out his or her debts.

Chapter 13 Bankruptcy

The main advantage of Chapter 13 bankruptcy in New Jersey is you can save your home from foreclosure. You must still pay your mortgage payments as laid out by the chapter 13 plan.

With a chapter 13 bankruptcy you may also extend and change payments of secured debts (this does not refer to your main residence mortgage) which can possibly lower payments.

The last advantage of a chapter 13 is you get to avoid dealing with creditors! You will pay your bankruptcy lawyer who will in turn pay your creditors.

You are eligble to file for chapter 13 bankruptcy in New Jersey if your unsecured debts are less than $307,675 and secured debts are less than $922,975.

New Jersey Bankruptcy Exemptions

New Jersey only offers state or federal exemptions. The exemptions can be found here

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