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An overview of chapter 7 bankruptcy in New Jersey

Understanding chapter 7 bankruptcy filings in New Jersey may help those struggling with overwhelming debt determine if it is the right option for them.

By the close of 2016, Cable News Network reports the total debt for U.S. households reached $12.58 trillion. Unfortunately for some who have taken on debts, financial challenges resulting from the loss of a job, a change in family circumstances or any other number of factors may affect their ability to pay back what they owe. In order to achieve a fresh financial start, some people in New Jersey and elsewhere may consider filing for chapter 7 bankruptcy. Having an understanding of this debt relief option may help them determine whether it is the right option for their circumstances.

Along with their petitions, people who file for chapter 7 bankruptcy must include information regarding their income, monthly living expenses, property, creditors and the nature of their debts. This information will be used to determine their eligibility for relief, as well as to aid in processing their cases.

Eligibility requirements

There are certain requirements people must meet to qualify for chapter 7 bankruptcy. Within 180 days of filing their petitions, those seeking this type of relief must complete credit counseling with an approved agency. Further, they must pass a means test, proving their income does not exceed the maximum allowed.

In some cases, having prior filings or dismissals of petitions may affect people's eligibility. Those pursuing chapter 7 bankruptcy cannot have had prior petitions dismissed in the 180 days prior to their filings for consciously not complying with court orders, willfully failing to appear before the court or voluntarily after their creditors attempted to recover the property for which they held liens.

Property liquidation

The basic idea behind a chapter 7 bankruptcy is that the debtor is allowed to keep a reasonable amount and certain kinds of his or her property, which is called exempt. If the debtor had additional property beyond that which is exempt, the additional property could be liquidated or sold to pay down the debtor's debts.

From a practical standpoint, however, little or no property is liquidated in most Chapter 7 cases because all or most property is exempt. According to the U.S. Courts website, most chapter 7 cases filed by individuals are "no asset" cases in which all property is exempt.

(If a debtor owns excess property beyond that which is exempt and he or she has regular income, a better choice might be to avoid liquidation by instead filing a Chapter 13 bankruptcy in which a three-to-five year repayment plan is created to pay down debts before discharging what remains.)

Debt discharge

With few exceptions, people may receive a bankruptcy discharge within 60 and 90 days of when their meeting of the creditors is held. Releasing filers from their personal liability for the eligible debts, discharges also prevent further collection action from creditors. Some of the most common types of dischargeable debts include the following:

  • Medical bills
  • Past due rent
  • Past due utility bills
  • Collection agency balances
  • Personal loans from employers, family members or friends
  • Some civil court judgments and auto accident claims

It is important for people to keep in mind that not all of their remaining debts after a chapter 7 bankruptcy may be discharged. Many student loans, alimony and child support arrears, and debts for restitution or criminal fines, among some others, may not be eligible.

Obtaining legal assistance

There are numerous steps and requirements involved with obtaining chapter 7 bankruptcy relief for people in New Jersey and elsewhere. Their lack of familiarity with the procedures may cause challenges and add stress to an already difficult situation. Therefore, those who are considering seeking bankruptcy protection may find it helpful to work with a lawyer. An attorney may help them determine the best course of action given their situations and guide them through the process.


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  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates
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Goldman & Beslow LLC

Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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7 Glenwood Avenue,
Suite 311B
East Orange, NJ 07017
East Orange Law Office

Phone: 973-414-8069
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