If you are thinking about filing bankruptcy a New Jersey bankruptcy because you are unemployed due to the coronavirus pandemic or are already in a Chapter 13 repayment plan in New Jersey, you may be wondering “will my stimulus check count as income if I file Bankruptcy?” Fortunately, if you are filing bankruptcy in New Jersey, the United States Trustee’s office recently provided an answer to this question that many individuals in New Jersey are wondering. on April 7, 2020 the United States Trustee’s office, stated that stimulus checks should not be included when calculating an individual’s current monthly income on the New Jersey Means Test.
You may have heard on the News that different programs were being implemented to help individuals who lost their job in New Jersey. One of the Acts passed to help New Jersey in the midst of this unknown time is the Cares Act. Under the Cares Act of 2020, the Federal government will soon begin issuing recovery rebates to qualified New Jersey individuals. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, the rebates will give individuals in New Jersey who make less than $75,000 a maximum of $1,200. While married couples who reside in New Jersey, who file jointly, and make less than $150,000 will be entitled to a maximum rebate of $2,400. Moreover, an additional $500 will be paid for each qualifying child under the age of 17.
The United States Trustee has provided guidance as to how these stimulus checks should be considered when filing a New Jersey bankruptcy. The United States Trustess has said the stimulus checks should not be included as disposable income or included counted as current income for purposes of calculating the New Jersey means test. This means that recovery rebates received within six months before the filing of a New Jersey bankruptcy petition should not be included in calculating a debtor’s current monthly income in a chapter 7 or chapter 13 case.
What Is the New Jersey Bankruptcy Means Test?
The bankruptcy Means Test determines if an individual qualifies for bankruptcy. In order to file a chapter 7 bankruptcy in New Jersey, every individual must pass the Means Test. The Means Test takes into account an individual’s income, and expenses to see what disposable income is left over. Congress enacted the Means Test as a way to stop individuals with high income from wiping out all of their debt. The higher the disposable income, the more likely an individual won’t be able to qualify for a New Jersey Chapter 7 bankruptcy to eliminate their debt.
The Means Test takes into account an individual’s average income over the last six months. It then compares that number, to the median household income of a family of similar size in the state they live in. For example, if you are a household of four in New Jersey you will only qualify for a Chapter 7 bankruptcy, if your total household income is under the Median household income for a household of four in New Jersey.
If your income is over the State median income then you will need to go to a second part of the Means Test. The second part of the Means Test looks at your expenses to determine if you have any disposable income left over. If you have disposable income left over, the Court believes that money should go to pay some of your debts back in a Chapter 13 bankruptcy. Depending on what your disposable income is you may be required to only pay a portion of your unsecured debts in a Chapter 13 bankruptcy. If you are unsure which chapter of bankruptcy you qualify for in New Jersey, you should speak with a New Jersey bankruptcy lawyer that can help you.
As far as the stimulus checks go, when counting your disposable income for the last six months you will not have to include the stimulus rebate checks into your income if you receive one. This is good news if you were on the verge of not being able to qualify for a New Jersey bankruptcy. Since this money won’t count as income you may still be able to qualify for a Chapter 7 bankruptcy in New Jersey.
Should I File a New Jersey Bankruptcy If I am Unemployed because of the Coronavirus
If you have lost all of your income and are thinking about filing bankruptcy, you are not alone. Many people New Jersey are facing financial hardships due to the coronavirus pandemic. Over the past few weeks unemployment in New Jersey has significantly increased. As more individuals continue to be unemployed, many are losing their insurance coverage. This in turn, is causing many individuals to face high medical bills. Individuals left with high debt and no income, are wondering if they should file a New Jersey bankruptcy.
Bankruptcy laws were put into place to help people who fell into hard times and give them a way to get back on their feet. Many people wrongly believe that if they file bankruptcy, they will never get credit again and all of their property will be taken away. This is isn’t true. Individuals can rebuild their credit immediately after receiving their bankruptcy discharge. A bankruptcy discharge is an order from the Court granting that the debts no longer have to be paid back. Moreover, New Jersey bankruptcy exemptions allow individuals to file bankruptcy and keep most of their property.
Filing a New Jersey Bankruptcy is a great tool if you can’t afford to pay your bills each month. One of the most powerful tools that individuals get when filing a New Jersey bankruptcy is the automatic stay. The Automatic Stay prevents creditors from initiating any lawsuits against consumers for owed debts. It also stops wage garnishments and bank levies. As soon as you file bankruptcy in New Jersey creditors are no longer to go after you. If they do, this can be a violation of the Automatic stay and creditors can be fined a lot of money.
Consumers and businesses in New Jersey can file bankruptcy to stop creditors from going after them. There are two types of bankruptcy chapters that consumers can file. Chapter 7 and Chapter 13.
In a Chapter 7 bankruptcy in New Jersey, debts are discharged. This means that debts are eliminated and you will no longer have to pay any debts that are owed.
In a Chapter 13, the debts are put into a repayment plan. A Chapter 13 bankruptcy in New Jersey is good for people who have high income and assets with equity. A Chapter 13 bankruptcy allows any interest and fees to stop accruing immediately allowing you time to catch up on your bills.
To determine which chapter of bankruptcy you should file, it is best to speak with a New Jersey bankruptcy lawyer who can review your financial situation and determine which chapter is best for you.
The coronavirus has left many individuals in a state of unknown. Many people don’t know if they should file for bankruptcy now or wait. Either way, it is a good idea to start doing some pre bankruptcy planning even if you are unsure if you want to file bankruptcy or not. Karra L. Kingston is a New Jersey bankruptcy lawyer. Karra L. Kingston Esq. has helped many individuals get out of debt and start over. If you have more questions about how the coronavirus will impact your bankruptcy filing our New Jersey bankruptcy lawyers can help. Give us a call today ar 973-979-9078 or email us at karra@klkbankruptcylawyer.com