There is no reason why anyone who is burdened by too much debt cannot seek relief. Federal law provides the means for a consumer to file for bankruptcy either under Chapter 7 or Chapter 13. A Chapter 7 can discharge most debt and enable consumers to protect most, if not all, of their assets. Under Chapter 13, consumers pay back creditors pursuant to a monthly repayment plan.
Bankruptcy is a right granted in the U.S. Constitution, which is regulated under federal law. There are, however, important facts that New Jersey residents should be aware of when filing in their state.
Bankruptcy Filing in New Jersey
As a New Jersey resident, you can file a bankruptcy petition in the United States Bankruptcy Court, District of New Jersey, in Newark, Trenton or Camden, depending on where you live. Check the court's online website for more information.
Can I File Chapter 7?
You can file for a Chapter 7 bankruptcy if your average monthly income is less than New Jersey's median income. However, if your average monthly income is equal to or greater than New Jersey's median income, you can still file Chapter 7 provided you can pass a means test.
How Long is a Chapter 13?
The duration of a Chapter 13 plan depends on your income as well. If your income is less than New Jersey's median income, then your Chapter 13 plan cannot exceed 36 months unless you demonstrate to the court that there is good cause for extending it up to 60 months.
Otherwise, if your average monthly income is equal to or exceeds New Jersey's median income, then your Chapter 13 plan will probably be for 60 months.
Will I Lose My Property?
Many debtors are able to keep all of their property. Each state allows you certain exemptions, which pertains to items of personal and real property that you can keep in bankruptcy. New Jersey has its own exemption laws, but you can choose between the state exemptions and those listed under federal law. You are not permitted to mix and match exemptions.
Federal and state exemptions include the following items of property:
- Homestead equity
- Household furniture, clothing and jewelry
- Engagement and wedding rings
- One vehicle
- Burial plot
- Tools of your trade
- Tax exempt retirement accounts
- Unemployment, workers compensation and welfare benefits
- Life insurance proceeds
- Certain amount of wages
Many of the state and federal exemptions vary widely in value. Regarding the homestead exemption, New Jersey has none except that the survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of the other spouse. The federal homestead exemption is $21,635 for an individual, or double for joint filers. New Jersey also has no specific exemption for a motor vehicle as compared to the federal exemption of $3,450. There are other differences in exemption values as well.
A New Jersey Bankruptcy Attorney Can Help
As each bankruptcy case is unique and the laws and rules are complicated for anyone, please contact a New Jersey bankruptcy lawyer.