New Jersey Bankruptcy Information

People interested in debt consolidation in New Jersey have also usually considered bankruptcy as a solution to their debt troubles. Of course, bankruptcy should only be used as a last resort when all other options have failed. If you're thinking about bankruptcy, here is everything you need to know about declaring bankruptcy in New Jersey.

Before You File

If you try debt consolidation in New Jersey to no avail, then you may need to declare bankruptcy to get out from under your debts. New Jersey bankruptcy laws require debtors to obtain credit counseling before they file, and the law also requires debtors to attend a financial management course while their bankruptcy case is pending. The New Jersey Bankruptcy Court website has a list of approved credit counselors. The site also has a list of approved financial management classes. You will also want to find an attorney before you file to help you navigate the process.

The Filing Process

The filing fee you will pay to declare bankruptcy in New Jersey will depend on the type of bankruptcy for which you file. In some cases, the filing fee for bankruptcy is much more expensive than debt consolidation in New Jersey, so make sure you thought the decision over carefully. To file a Chapter 7 bankruptcy petition, you must pay a filing fee of $299. A Chapter 13 petition costs $274. If you cannot afford to pay the fee at the time you file, the court gives the option of paying via an installment plan of no more than four installments.

Chapter 7 vs. Chapter 13

The most common types of individual bankruptcy filings in New Jersey are Chapter 7 and Chapter 13. Also known as liquidation, Chapter 7 bankruptcy is the simplest and fastest form of bankruptcy. In a Chapter 7 bankruptcy, a trustee sells your non-exempt property in order to pay your creditors. Exempt property in New Jersey includes your home (up to $20,200), your vehicle (up to $3,225), tools of your trade (up to $20,000), and other essentials. Most Chapter 7 bankruptcies are no-asset cases, which means the debtor has no non-exempt property that the trustee can sell. Once you file for bankruptcy, your creditors cannot try to collect your debts anymore.

Chapter 13 bankruptcy is more similar to debt consolidation in New Jersey in that it involves a debt repayment plan that must be three to five years long. A copy of your plan is given to your creditors, and they can object if they believe the plan is unreasonable. Once your plan is approved, you can keep all of your assets during the repayment period. Chapter 13 bankruptcy is ideal for people who have mortgages or other loans on property that they do not want to lose. Chapter 13 is also well-suited for people who have debts that are not dischargeable in bankruptcy, such as student loans, taxes, or child support.