There are many contributing factors that are associated with financial hardship. Some common reasons include unmanageable debt, divorce, sudden unemployment, serious illness, or foreclosure.
In fact, the average credit card debt in New Jersey is a whopping $6,345 per person. In addition, foreclosure rates are also as staggering, one out of every 788 NJ homes is currently in foreclosure.
If you have found yourself in similar situations, then you are probably facing other personal problems that come with being in debt. The fear of losing your vehicle, house or your income can drain a person physically and emotionally. You may have even considered Claiming Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are surprisingly not alone. Close to a million people file bankruptcy each year in the United States. Bankruptcy is a device established by the US Government to help struggling Americans find relief from massive debt. You may want to consider personal bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the chance to get out from underneath considerable debt while still working with lenders in a legal capacity. It is initiated by an individual filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or by spouses jointly. When the bankruptcy is over, the filer will ‘exit’ and will have a chance for a fresh start on their finances.
Throughout the bankruptcy process, a trustee is appointed to oversee the particulars of the matter. His or her duties will vary and depend on whether the individual has filed for Chapter 13 or Chapter 7 bankruptcy.
Did you know that New Jersey ranks #22 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 304 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
People in New Jersey, who claim bankruptcy, can choose to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. Want to know the difference? Take a look at the descriptions below for more information:
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation
A Chapter 13 Bankruptcy plan is reserved for people who have the means to pay some of their debts through a restructuring. The individual will be allowed to keep his or her valuable assets over a 3- to 5-year period.
In order to determine which type of bankruptcy an individual will file, they will have to determine their ability to repay using the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The objective of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
- None. However, survivorship interest of spouse in property held as tenancy by the entirety is exempt from creditors of the other spouse.
- Clothing; goods, personal property, and stock or interest in corporations up to $1,000 total.
- Household good and furniture up to $1,000.
- Burial plots.
- 90% of earned but unpaid wages if your annual income is less than 250% of the federal poverty level. If income is higher, 75%.
- Military personnel wages and allowances.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283, 025.
- Civil defense workers.
- School district employees.
- Trust containing personal property if it was created pursuant to federal tax law.
- Prison employees.
- Alcohol beverage control officers.
- County employees.
- City workers’ ERISA-qualified benefits.
- Municipal employees.
- Public employees.
- Police officers, firefighters, and traffic officers.
- City boards of health employees.
- Street and water department employees.
- State police.
- Workers’ compensation.
- Unemployment compensation.
- Old-age, permanent disability assistance.
- Crime victims’ compensation.
- Civil defense workers’ disability, death, medical or hospital benefits.
- Health and disability benefits.
- Life insurance proceeds, dividends, interest, loan, cash, or surrender value, if not the insured.
- Annuity contract proceeds up to $500 per month.
- Group life or health policy or proceeds.
- Life insurance proceeds if policy prohibits use to pay creditors.
- Military member disability or death benefits.
- Fraternal benefit society benefits.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
You are not required by law to hire an attorney to declare relief. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not an easy task.
Filing Bankruptcy without an Attorney
A simple Chapter 7 proceeding that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that may not require an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
In most cases, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy attorney is there to represent you and not the creditors.
An attorney is also keenly familiar with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in NJ, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In New Jersey
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In New JerseyMartin Luther King, Jr. Federal Building and United States Courthouse
50 Walnut Street
New Jersey Bankruptcy Court
Clarkson S. Fisher Federal Building and United States Courthouse
402 East State Street
New Jersey Bankruptcy Court
United States Post Office and Courthouse
401 Market Street
New Jersey Bankruptcy Court
Additional New Jersey Resources
Foreclosure Help Program
Disability SSDI Benefits