Living in New Jersey can be expensive, and if debts start to pile up, bankruptcy may provide an opportunity for a fresh start. However, bankruptcy matters in New Jersey is a complex process that requires competent legal representation.
A bill currently being considered in the state legislature would significantly increase the amount of property bankruptcy filers can exempt from proceedings. This could decrease the amount of monthly payments they must make and prevent them from having to sell off valuable assets to pay creditors back.
How Bankruptcy Works
During the Covid Pandemic, many individuals took out high vehicle loans that they now cannot afford to pay. Fortunately, filing for bankruptcy allows them to get the time they need to pay off their car loan or return the vehicle to the lender without remaining responsible for the outstanding debt.
The first step in bankruptcy is to gather information about your assets and liabilities with the help of a knowledgeable New Jersey bankruptcy attorney. This information will include a list of all of your income and expenses as well as a listing of all the property you own including its value and any liens that may be attached to it.
About a month after your bankruptcy is filed you will attend a meeting of creditors (also known as the 341 meeting). This meeting is run by the Bankruptcy Trustee who will verify your identity and ask you questions under oath about your financial history. After this meeting, your attorney will file several additional documents in court.
Filing for Bankruptcy
Before filing a bankruptcy petition, an individual must complete a credit counseling course. This can be done online or over the phone. The certificate must be filed with the court along with the bankruptcy papers.
In a Chapter 7 bankruptcy, the debtor turns over any nonexempt property to the trustee who sells it to make payments to creditors. Exemption laws allow a debtor to keep some personal property, like a house or car. In most cases, the Trustee will not liquidate any property if it is secured by a valid lien.
The bankruptcy process can be confusing. A qualified New Jersey bankruptcy attorney can assist individuals by researching their specific financial situation and developing a strategy that uses the law to their advantage. An attorney can also prevent a creditor from repossessing a vehicle or harassing debt collectors while helping them to find a way out of their current financial struggles. A bankruptcy can help an individual get out from under a high vehicle loan and get back on their feet financially.
Fee Waiver
Currently the cost to file bankruptcy in New Jersey is $306 ($245, $46 miscellaneous administrative fee and $15 trustee surcharge). If you cannot afford these fees, you can apply for a fee waiver by completing and filing two court forms.
A judge will use your application to determine whether you qualify for a fee waiver. In order to get a full understanding of your bankruptcy options, you should discuss this issue with an experienced attorney.
Sometimes people who file for Chapter 7 have large debts like home mortgages and car loans that they can’t keep current. In these cases, a judge could reclassify secured debt as an unsecured debt and discharge it. This is a strategy known as strip-off and it’s one of many advanced bankruptcy options that a knowledgeable lawyer can unlock for you. For example, if you have an equity line of credit on your home that’s larger than the value of your house, you can ask a judge to reclassify it as an unsecured debt.
Local Exemptions
A lot of people who consider filing bankruptcy worry that they will lose their homes or cars. The good news is that the law makes exemptions available to protect property from creditors during a bankruptcy case. These laws are called bankruptcy exemptions. They are designed to protect a person’s equity in their home or car so that it isn’t used to pay off unsecured debts.
A New Jersey bankruptcy lawyer can explain the state’s exemptions and federal bankruptcy exemptions to their clients. Several states allow their residents to choose between the federal bankruptcy exemptions and the state’s own set of bankruptcy exemptions. New Jersey is one of these states.
If a person’s vehicle has been repossessed during the Covid pandemic they may file for bankruptcy to prevent their creditor from being able to sell the vehicle and collect on the debt. Filing for bankruptcy can also stop wage garnishment, debt collection harassment and similar actions by creditors.
