Bankruptcy is a legal process that allows individuals or businesses to declare and resolve their inability to repay their debts. The bankruptcy process can be complex and is governed by both federal and state laws. In New Jersey, bankruptcy is meant to be an option to provide a fresh start for those who are facing overwhelming financial problems. Whether you’re considering bankruptcy to deal with medical debt or other consumer debts such as home or vehicle payments, consulting with an experienced attorney is important.
Our team of knowledgeable and compassionate New Jersey bankruptcy lawyers understands the importance of safeguarding your financial interests. Straffi & Straffi Attorneys at Law has been concentrating on bankruptcy cases for Central and Southern New Jersey for the past eight years. If you are struggling with debt, we are here to provide you with sound legal advice and representation. We can conduct a comprehensive evaluation of your case and provide you with your available options. Contact us at (732) 341-3800 to schedule a consultation.
The Bankruptcy Process in New Jersey
The process of bankruptcy in New Jersey is divided into two types: Chapter 7 and Chapter 13 bankruptcy. Each type has its own timeline and procedure that must be followed by the debtor seeking relief from debts.
Chapter 7 Bankruptcy Timeline
Chapter 7 bankruptcy, commonly known as a “liquidation” bankruptcy, allows the debtor to discharge their unsecured debts, such as credit card debts and medical bills. The following is the timeline of events in a Chapter 7 bankruptcy case:
- 341 Meeting of Creditors: Approximately 30 to 45 days after filing for bankruptcy, the debtor is required to attend a meeting with their bankruptcy trustee and any creditors that choose to attend. The meeting, known as the 341 Meeting of Creditors, allows the trustee and creditors to verify the debtor’s assets and financial situation. The debtor is expected to answer questions under oath regarding their assets and financial affairs.
- Debtor Education Course: Within 60 days of the 341 Meeting of Creditors, the debtor must complete a mandatory debtor education course. This course provides the debtor with information about responsible financial management, and a certificate of completion must be filed with the court. Failure to complete this course can result in a case dismissal.
- Trustee’s Liquidation of Assets: In a Chapter 7 bankruptcy, the trustee is responsible for identifying and liquidating the debtor’s non-exempt assets. Non-exempt assets are those not protected by bankruptcy exemptions, such as luxury items and investment properties. The proceeds from the liquidation are then used to pay off creditors according to the priority of their claims.
- Discharge of Debts and Case Closure: Once the trustee has liquidated the debtor’s non-exempt assets and distributed the proceeds to creditors, the debtor is granted a discharge of their eligible debts. A discharge order is issued by the court, which legally releases the debtor from any further obligation to repay the discharged debts. The case is then closed, typically within four to six months from the date the debtor filed the bankruptcy petition.
A Chapter 7 bankruptcy can provide relief for those struggling with unsecured debts, but it is important to understand the timeline and requirements of the process to increase the chances of a successful outcome.
Chapter 13 Bankruptcy Timeline
Chapter 13 bankruptcy, also known as a “reorganization” bankruptcy, allows the debtor to restructure their debts into a manageable repayment plan lasting three to five years. The following is the timeline of events in a Chapter 13 bankruptcy case:
- 341 Meeting of Creditors: Similar to the Chapter 7 process, the debtor must attend a 341 Meeting of Creditors within 30 to 45 days after filing their bankruptcy petition. However, in a Chapter 13 case, the primary purpose of this meeting is to resolve any objections by the trustee or creditors to the debtor’s proposed repayment plan.
- Debtor Education Course: Like Chapter 7, the debtor must complete a mandatory debtor education course and file the certificate of completion with the court within 60 days of the 341 Meeting of Creditors.
- Confirmation of the Chapter 13 Repayment Plan: Within 45 days of the 341 Meeting of Creditors, a confirmation hearing is held in court to determine whether the debtor’s proposed repayment plan is feasible and meets the requirements of the bankruptcy law. If the plan is confirmed, the debtor begins making payments to the trustee, who then distributes the funds to the various creditors in accordance with the plan.
- Repayment Period and Discharge of Remaining Debts: Under the confirmed repayment plan, the debtor may take up to five years to repay their debts, depending on their income and other factors. Upon successful completion of the repayment plan, the debtor is granted a discharge of any remaining eligible debts. The case is then closed, and the debtor is released from their previous financial obligations.
The bankruptcy process in New Jersey involves a series of important steps, including meetings, courses, and court hearings to ensure the debtor understands their obligations and the consequences of bankruptcy. The entire process can last between four months for a Chapter 7 case to several years for a Chapter 13 case, depending on the debtor’s financial situation and compliance with court requirements.
| Step | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy |
|---|---|---|
| Filing the Bankruptcy Petition | Debtor files a Chapter 7 bankruptcy petition | Debtor files a Chapter 13 bankruptcy petition |
| Automatic Stay | Automatic stay goes into effect, providing immediate protection from creditors’ collection actions | Automatic stay goes into effect, providing immediate protection from creditors’ collection actions |
| Appointment of a Trustee | A bankruptcy trustee is appointed to oversee the case and liquidate non-exempt assets | A bankruptcy trustee is appointed to oversee the case and manage the repayment plan |
| Creditors Meeting (341 Meeting) | Debtor attends the 341 Meeting of Creditors where trustee and creditors can ask questions | Debtor attends the 341 Meeting of Creditors where trustee and creditors can ask questions |
| Liquidation of Non-Exempt Assets | Trustee identifies and liquidates non-exempt assets to repay creditors | Debtor keeps assets but pays creditors through a repayment plan |
| Discharge of Debts and Case Closure | Eligible debts are discharged, providing relief from personal liability. Bankruptcy case is closed | Remaining eligible debts are discharged, providing relief from personal liability. Bankruptcy case is closed |
Steps to Take Before Filing for Bankruptcy
Before filing for bankruptcy in New Jersey, it is crucial to take the time to evaluate your financial situation and ensure that bankruptcy is the best option for you. Consider alternative solutions, such as debt negotiation or consolidation, to evaluate whether bankruptcy is the right path for you.
It is also a good idea to have a clear understanding of your assets, debts, and expenses; this will help you determine which type of bankruptcy to file for and arrange your finances for the best possible outcome in your case. Lastly, research the bankruptcy process, including the types of bankruptcy available, the requirements for each, and the impact it will have on your credit and financial future.
Gathering Documentation and Financial Information
When preparing to file for bankruptcy, it is vital to gather accurate and thorough financial information that accurately represents your financial situation. This documentation will be used to complete official bankruptcy forms and communicate with the court and trustee about your case. Some types of documents you will need to gather and organize include:
- Tax returns for the past two years
- Pay stubs or proof of income for the last six months
- Bank statements for the past six months
- Documentation for any retirement accounts, pension plans, or other investments
- Mortgage loan documents, if applicable
- Any recent appraisals or valuation of your home
- Property tax bills
- Documentation for any vehicles, including loans, leases, and registrations
- A list of your creditors, including balances and account numbers
- Any court judgments, lawsuits, or garnishments
These documents will help you complete the required forms and schedules and provide a clear picture of your financial situation for the court.
Credit Counseling Requirement
Before filing for bankruptcy in New Jersey, you are required to complete a credit counseling course from an approved counselor. This course is designed to help you evaluate whether bankruptcy is the best option for your financial situation and provide you with education and resources for managing your finances in the future. After the course, you will receive a certificate of completion that must be included with your bankruptcy filing.
Choosing Between Chapter 7 and Chapter 13 Bankruptcy
Choosing the right type of bankruptcy for your situation is crucial for a successful outcome. In New Jersey, the two main types of bankruptcy available to individuals are Chapter 7 and Chapter 13.
- Chapter 7 bankruptcy, often called “liquidation” bankruptcy, allows you to discharge many of your unsecured debts, such as credit cards and medical bills. However, this may require the liquidation of some non-exempt assets to satisfy your creditors. To qualify for Chapter 7, you must pass the means test, which evaluates your income and expenses to determine if you have the ability to repay a portion of your debts.
- Chapter 13 bankruptcy, also known as “reorganization” bankruptcy, involves creating a repayment plan to pay back a portion of your debts over a specified period (typically three to five years). Chapter 13 bankruptcy allows you to keep your assets while working to repay your debt.
Consult an experienced New Jersey bankruptcy attorney to determine the right type of bankruptcy in your specific case.
Filing the Bankruptcy Petition
Throughout the filing process, it is essential to understand your rights and obligations, as well as the potential consequences of filing for bankruptcy.
Completing the Bankruptcy Forms
Before filing your bankruptcy petition, you must complete the necessary forms. These forms include schedules and statements that detail your financial situation, such as your debts, assets, income, and monthly expenses. You may obtain the forms directly from the U.S. Courts website or consult with a bankruptcy attorney or bankruptcy petition preparer.
To fill out the forms correctly, you must gather relevant financial information, such as recent pay stubs, bank statements, credit card bills, and mortgage documents. It is essential to provide accurate information in these forms, as incomplete or false information can lead to a case dismissal or even potential criminal charges for bankruptcy fraud. Be prepared to provide a complete list of your creditors, their contact information, and the total amount owed to each one.
In addition to the standard bankruptcy forms, you may also need to complete additional local forms specific to the New Jersey district in which you are filing. These forms may include a statement of social security number, debtor’s certification of completion of post-petition instruction, and others. New Jersey bankruptcy courts are divided into three divisions, based on the debtor’s geographic location.
Filing Fees and Fee Waivers
When you file for bankruptcy, you must pay a filing fee, which varies depending on the type of bankruptcy. For Chapter 7 bankruptcy, the filing fee is $338, and for Chapter 13 bankruptcy, the filing fee is $313. These fees can be paid in cash, money order, or cashier’s check, payable to “Clerk, U.S. Bankruptcy Court.”
In certain circ*mstances, debtors may qualify for a fee waiver or installment plan. To request a fee waiver, you must complete and submit the “Application to Have the Chapter 7 Filing Fee Waived.” The court will consider your income, assets, expenses, and other financial circ*mstances to determine whether you are eligible for a fee waiver.
If you are not eligible for a fee waiver, you can request to pay the filing fee in installments by submitting the “Application for Individuals to Pay the Filing Fee in Installments.”
Submitting the Petition to the New Jersey Bankruptcy Court
Once your bankruptcy forms are completed, and you have paid the filing fee or obtained a waiver, you must file your petition with the appropriate New Jersey bankruptcy court division – Camden, Trenton, or Newark. You can submit the forms in person or by mail. Keep in mind that filing by mail may result in delays.
After submitting your bankruptcy petition, the court will assign a trustee to your case. The trustee’s role is to review your financial situation, represent your creditor’s interests, and oversee your bankruptcy case’s administration, including holding the required 341 meeting of creditors.
Automatic Stay and Creditor Notifications
Upon filing your bankruptcy petition, an automatic stay is put into effect, which provides temporary protection against most creditor actions, such as lawsuits, wage garnishments, and collection calls. This relief allows you to focus on resolving your financial situation, working with the trustee, and participating in credit counseling and debtor education courses.
The bankruptcy court will notify your creditors of your bankruptcy filing, and they must cease collection efforts against you, as long as the automatic stay remains in effect. It is essential to understand that certain debts, such as child support and taxes, may not be discharged in bankruptcy, and collection actions for these debts may continue despite the automatic stay.
Working with an Experienced New Jersey Bankruptcy Attorney
Filing for bankruptcy in New Jersey can be a complicated and often overwhelming process, and it is essential to have the guidance and support of an experienced bankruptcy attorney to help you navigate the system. An attorney can help you understand the requirements and procedures, complete and file the necessary forms and schedules, represent you in court proceedings, and advocate for your best interests throughout the process.
Our team of experienced New Jersey bankruptcy attorneys, led by Daniel Straffi Jr., is highly knowledgeable in bankruptcy laws. We have been serving Central and Southern New Jersey as a dedicated bankruptcy law firm. Our primary focus is to assist individuals in achieving financial freedom and a fresh start in life. We understand that being unable to pay your debts can be overwhelming and can cause immense stress not only for you but also for your family.
If you are facing such a situation, we can offer you the legal advice and representation you need. Our firm, Straffi & Straffi Attorneys at Law, has helped numerous families and businesses in Ocean County, Monmouth County, and other areas in New Jersey start anew. To schedule a consultation, contact us today at (732) 341-3800.
