Bankruptcy in New Jersey

2007-10-19 12:27:25

( Legal )



Basic Bankruptcy Conditions

As an individual consumer, you should consider filing for bankruptcy when you can no longer pay your financial obligations on time. You should also consider bankruptcy if you are faced with a debilitating situation, such as serious illness, divorce, or loss of a major source of income.

If you file for bankruptcy, you should realize that there are still some obligations you cannot escape from, such as student loans, alimony, back taxes and any obligations you have acquired within a few months prior to filing.

Every state has its own bankruptcy laws and policies. While there are provisions in common, laws on bankruptcy in New York differs from that of New Jersey.

Filing for Chapter 7 Bankruptcy in New Jersey

As a New Jersey resident, you have the choice to file under Chapter 7 or Chapter 13.

Under Chapter 7, most of your debts will be canceled. However, your creditors will also claim against most of your personal assets. Under Chapter 13, you will need to set up a debt restructuring plan, where you will be paying in more affordable amounts until you satisfactorily wipe out all your existing obligations.

Qualifying under Chapter 7 bankruptcy in New Jersey is quite difficult, and you need to undergo a means test to determine your eligibility. You will only be eligible for Chapter 7 if you are currently earning below the state's median income. The median income is based upon census statistics of the state.

Filing for Chapter 7 bankruptcy in New Jersey will give you a fresh start with almost no obligation, but will also cause a dent in your credit record for at least seven years.

The state will allow you to keep certain assets such as your own home, active life insurance policies, pensions, disability benefits, burial plots, and personal effects up to specified amounts.

Filing for Chapter 13 Bankruptcy in New Jersey

Most creditors prefer that you file this type of bankruptcy, since it allows continuity of your debt payments. Under Chapter 13, you are assumed to be earning an income level that is sufficient for both your subsistence and for paying off at least a part of your debts on a regular basis.

You need to present a payment plan which extends from three to five years, and shows full payment for all your obligations including taxes. The payment proposal will be presented to all your creditors, who in turn have the right to approve or disapprove it. Once your plan is approved, you will pay your debts through a bankruptcy trustee.

Seeking Legal Advice for Bankruptcy in New Jersey

Depending on the severity of your case, you may want to consult a New Jersey lawyer before filing for bankruptcy. A New Jersey lawyer can explain your options and help you prepare the necessary documentation and supporting information to expedite your bankruptcy case.

To look for a qualified New Jersey lawyer, consult the local state bar or people that you can trust.


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