Filing for bankruptcy in New Jersey can be complex, but understanding the basics can help you navigate it more easily. There are two main types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves liquidating non-exempt assets to pay off debts, allowing you to start fresh. It’s usually for people with limited income and assets. Chapter 13 bankruptcy, on the other hand, allows you to keep your property and repay debts over three to five years. This option is typically for those with a steady income who can afford to make regular payments.
Preparing to file
Before filing, assessing your debts, income, and expenses can help determine which type of bankruptcy is appropriate. Attending a credit counseling session from an approved agency is also helpful. It’s required before filing and helps you understand your financial options. Decide between Chapter 7 or Chapter 13 based on your financial situation and goals. Consider factors like income, assets and debt type. You will also need to collect necessary documents, including tax returns, pay stubs, bank statements and a list of debts and assets. You will also need various forms at the state and federal level.
The filing process
Whichever type you choose, here’s a step-by-step guide to filing bankruptcy in New Jersey:
- Complete bankruptcy forms: After all the above preparation, it is time to complete the required bankruptcy forms detailing your financial situation.
- File your petition: Submit your completed forms to the bankruptcy court. This officially starts the bankruptcy process and triggers an automatic stay, halting most collection actions against you.
- Pay filing fees: Pay the necessary filing fees. You may request a fee waiver or installment payments if you can’t afford them.
- Appoint a trustee: The court will appoint a bankruptcy trustee to oversee your case. The trustee reviews your documents and manages the bankruptcy process.
- Attend the meeting of creditors: Participate in a meeting with the trustee and your creditors. You’ll answer questions about your financial situation under oath.
- Complete debtor education course: After filing, complete a debtor education course, which is required to receive a discharge of your debts.
- Plan confirmation (Chapter 13 only): If filing Chapter 13, the court must approve your repayment plan. You’ll work with the trustee and creditors to finalize the terms.
- Discharge of debts: Once the filer meets all requirements, the court discharges your eligible debts, which means you’re no longer legally obligated to pay them.
Its important to remember that not all debts can be discharged. Common examples include taxes and student loans.
Additional guidance available
Filing for bankruptcy is a serious decision with long-term consequences. It’s often helpful to consult with a bankruptcy attorney who can provide guidance and ensure that you follow all necessary steps correctly. With careful planning and professional support, you can navigate the bankruptcy process and work towards a more stable financial future.