In order to file Bankruptcy in New Jersey, it is important to understand how to file bankruptcy and which chapter of bankruptcy you qualify for. The first step in doing this is to speak with a bar certified New Jersey bankruptcy attorney that can review your case and explain all of the different bankruptcy exemptions to you.
Bankruptcy Means Test:
In order to determine which chapter of bankruptcy you qualify for you must pass the means test.
Under the Means Test your income and expenses are analyzed to determine if you qualify for Chapter 7 bankruptcy or Chapter 13 bankruptcy. In applying the means test, the court will average your last 6 months of income prior to the filing and compare it to the average median income in New Jersey. If your income is below the average median income in New Jersey then you may qualify for a chapter 7. However, if your median income is above the average median income in New Jersey then you will have to move to the second part of the means test to determine if you qualify for a chapter 7 or a chapter 13 bankruptcy.
As of October 2018 the average median income household for New Jersey to file bankruptcy are as follows: (please note these numbers are subject to change)
| Household Size | Median Income |
| 1 | $66,284 |
| 2 | $81,054 |
| 3 | $98,174 |
| 4 | $121,226 |
| 5 | $129,626 |
| 6 | $138,026 |
Gathering All of Your Paperwork
To begin the bankruptcy process you will have to collect a bunch of paperwork that will be used to prepare your bankruptcy petition. Some of this paperwork includes: paystubs; bank statements; a list of your monthly expenses; any major financial transactions for the last two years; and property (all assets and possessions, not just real estate); tax returns for the last two years, deeds to any real estate you own, and your car(s) titles.
Credit Counseling
Once you have all of your documents you will need to complete a credit counseling course. Most of these courses are online and take about 45 minutes to an hour to complete. According to the 2005 Bankruptcy Act that was passed, all individual debtors who file bankruptcy on or after October 17, 2005, must undergo credit counseling within six months before filing for bankruptcy. Further, after the bankruptcy is filed you will have to complete a financial management course which may also be found online.
How to File Bankruptcy in New Jersey
Once you have gathered this information and completed your credit counseling course you will then need to determine which of your assets are exempt in order to complete your petition. Within your petition you will fill out all of your income, debt, financials and exemptions. Your petition will then need to be filed online along with several other forms. In order to determine the other forms you need, you can go to the bankruptcy court. I strongly advise seeking a New Jersey bankruptcy attorney who can help you with the forms and ensure that they are being filled out properly. In addition, a New Jersey Bankruptcy attorney can go over your exemptions to make sure you are using the correct ones. The cost for filing a Chapter 7 bankruptcy is $335.
How to File a Chapter 13 Bankruptcy
If you are filing a Chapter 13 you will have to file the same petition as you do in a chapter 7 however, you will also have to include a proposed repayment plan. The repayment plan must be made in good faith and be for three to five years. In additions, the chapter 13 repayment plan will show that after you pay your monthly expenses you will have a certain amount of money left over to pay your creditors and arrears. Thus, you will need to see after your reasonable monthly expenses have been paid, how much money will you have left over to put toward your outstanding bills? It is important to know that secured and unsecured creditors are treated differently. Secured creditor claims take priority and must be paid in full while unsecured debts may not be. Unsecured creditors must be paid as much as they would have been if you had filed a
Chapter 7 bankruptcy.
As soon as your case is filed you will begin making your plan payments. If you have an attorney your attorney should work with you to determine how you payments will be made to the trustee.
What is the Automatic Stay
Once you have filed your paperwork with the bankruptcy court, an automatic stay immediately goes into effect. This stops any creditor from making direct contact with you in any form ( ie. letters, phone calls etc). If you are facing foreclosure this will stop any foreclosure proceedings. It is important to note that creditors can make motions to lift the automatic stay which will be decided by a judge.
What is a Bankruptcy Trustee
The bankruptcy trustee is an attorney that represents your creditors. After you file your bankruptcy petition a trustee will be appointed to your case by the court. The trustee will ensure that you paperwork is filled out correctly. The trustee will see if there was any money in any accounts prior to the filing of the bankruptcy and check to see if you have any assets that you are hiding. The trustee will make sure that if you have any money or fraudulently transferred anything prior to the bankruptcy that the money is returned and paid to your creditors. It is important to note that the trustee can challenge anything in your petition if he thinks that you should not be given a discharge.
341 Meeting of Creditors
After you file your petition you will receive a letter in the mail setting forth the date, time, location of your first meeting of creditors which you must attend. This court proceeding is referred to as a 341 meeting. At the meeting the creditors have a right to attend and object to your bankruptcy discharge. Creditors rarely attend a Chapter 7 bankruptcy meeting and one or two creditors may attend a Chapter 13 meeting if there is a question about your plan. Objections are typically resolved by negotiation between the debtor or the debtor’s counsel and the creditor.
The meeting of creditors typically lasts about fifteen minutes but can last longer depending on the trustee. When you get to court you or you and your attorney will sit at a desk and confirm that everything within your petition is true and correct. You will be sworn under oath to ensure that any statements you are testifying about are truthful.
If the trustee finds some inconsistencies he or she may ask you to amend your petition. Further, if the trustee finds that some of your assets are not exempt he or she may require you to turn them over. The trustee will then sell your asset and pay your creditors. The trustee also has the right to abandon the property if he does not it. Moreover, trustees may also require more paperwork if they want to further look into something thus, they may require you to appear in court again or set a holding date until they receive further information.
If your meeting of creditors is closed with no issues then you will receive a discharge as long as there is no further objections to your discharge. Trustees and creditors have 60 days to challenge the debtor’s right to a discharge. If there are no challenges, you will receive a notice from the court that your dischargeable debts have been discharged within three to six months.
Chapter 13 Plan Confirmation
In order to finish your chapter 13 bankruptcy case you must have your Chapter 13 plan confirmed. In order to do so you will need to attend a hearing before a bankruptcy judge who will either confirm or deny the repayment plan. If your plan is confirmed and you make the required plan payments for the three to five years, the balance (if any) on the dischargeable debts you owe will be discharged.
Should I Hire a Bankruptcy Attorney:
I always suggest that you should hire a bankruptcy attorney. Bankruptcy is federal law and you want to ensure that you know which of your assets to exempt and which should not be exempt. An attorney can explain all of these New Jersey Bankruptcy exemptions to you to ensure that you will keep your assets. Moreover, a bankruptcy attorney will be able to prepare you for the questions that the trustee will ask you in court and further be able to determine which chapter you should qualify for. Karra Kingston and William Bonomo are both New Jersey Bankruptcy Attorneys that can help you. Bonomo & Bonomo Attorneys At Law have years of bankruptcy experience call them today to set up a free consultation.