Bankruptcy in New Jersey begins with gathering the correct paperwork.
Since the 2005 Bankruptcy Act this paperwork has been more extensive
and includes many more documents. Some of the necessities include motor
vehicle titles, real estate titles, tax return information from the
past two years, purchasing information for large items in the past six
months, personal expenses, personal income, and living arrangements.
These papers can be gathered through an attorney or by oneself. The
information then is filed with an attorney through an electronic
database in a personal meeting, through a do-it-yourself database, or
through a personal attorney using an electronic database. All the
necessary paperwork is submitted electronically to insure speed and
A Means Test
Before a petition is completed, or even begun, an individual must
submit to a bankruptcy means test through the state of New Jersey. This
test will compare an individual's income, personal expenses,
outstanding debts, and living arrangements to that of all other New
If an individual's score falls above the calculated median of the
state, then he or she is eligible for Chapter Thirteen bankruptcy. If
an individual's score falls below the calculated median for New Jersey,
then he or she is eligible for Chapter Seven bankruptcy. Other kinds of
bankruptcy are available for family-owned farms and corporations.
Chapter Thirteen Bankruptcy
Chapter Thirteen bankruptcy is for consumers who have the resources to
pay off creditors by using their own income. The bankruptcy court will
designate a personal payment plan for the individual's specific needs.
This payment plan will be based on his or her income, expenses, and
The plan will not exceed five years and will not be less than three
years. New Jersey states that if an individual is able to pay a minimum
of one hundred sixty-six dollars a month on his or her debts, he or she
is eligible for Chapter Thirteen bankruptcy.
Chapter Seven Bankruptcy
Chapter Seven bankruptcy is for consumers who cannot pay a minimum of
one hundred dollars a month on their debts. After a petition is
accepted, the court will designate a trustee to the case.
The trustee will be responsible liquidating any non-exempt property and
using the obtained commission to pay off creditors. The non-exempt
property will be sold for the highest value possible. This entire
process can take up to six months or as few as three months for a
single case. Once a petition has been granted all pending foreclosures
will be halted.
New Jersey states that those filing for bankruptcy have the right to
choose federal exemptions or New Jersey exemptions for Chapter Seven
bankruptcy. New Jersey exemptions include categories of different forms
of property and values. These categories include insurance,
miscellaneous, pensions, personal property, public benefits, and wages.
Other states may also have homestead categories and wild card
categories. Some of the exempt property can include business
partnerships, teacher pensions, life insurance, burial plots, clothing,
disability benefits, furniture and goods under one thousand dollars,
and workers' compensation.