Time to File a Chapter 7 Bankruptcy New Jersey?

Bankruptcy laws have been passed to help citizens who have made financial mistakes. When you have lost your income, maxed the limits of your credit cards, found yourself in arrears on your mortgage, obtained a recent divorce, or gotten ill and can no longer pay your bills, it may be time to consider bankruptcy.

Chapter 7 Bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships.

To file Chapter 7 Bankruptcy, filers must pass an income and means test. If your income is below the median income for families in your state, based on Census Bureau statistics, you will be eligible to file. For instance, the median income of a family in New Jersey in 2009 was $70,101 for a two person family, $84,721 for a three person family, and $101,841 for a four person family.

If you make more than the median income then your disposable income will be evaluated. Disposable income, more accurately called discretionary income, is the total gross income of all the earners in a family, minus the cost of taxes and living expenses. If you have a discretionary income of $100 per month that you can apply to service unsecured debt for the next 60 months, or $6000, you might not qualify for Chapter 7 Bankruptcy.

If you have a discretionary income of up to $167 per month over the next 60 months that can be used to service unsecured debt, or up to $10,000, and you can pay off 25% or more of your unsecured debts within that time frame, you might not qualify for Chapter 7 Bankruptcy.

If you qualify for Chapter 7 Bankruptcy, a court-appointed trustee will gather and sell your non-exempt property and will use the proceeds from the sale to pay your creditors. Most Chapter 7 Bankruptcy cases are “no-asset” cases.

Filing Chapter 7 Bankruptcy will initiate an automatic stay and all collection actions must cease. Creditors will have to go through the trustee to recover debt. If you do not have any non-exempt assets to sell, the creditors will not receive anything for their debt collections, and once discharged you will not owe the debts and the creditors will have no more legal recourse.

Chapter 7 Bankruptcy does not discharge all debts. Chapter 7 Bankruptcy will not discharge alimony, child support, back taxes, most student loans, large recent purchases of more than $550 for luxury items, fines and penalties by government agencies, fraudulent debts, and cash advances of $825 within 70 days of filing.

Also, if a creditor has a lien on any type personal or real property, filing a bankruptcy will have no effect, and the creditor can still legally claim the property to satisfy the lien.

If you have assets that are non-exempt, a trustee will seize the property and liquidate the assets to pay-off your creditors. If there is any money after the liquidation of assets the debtor will be the beneficiary of the proceeds. You can keep property you claim as exempt or property you buy back from the trustee.

In New Jersey, you can choose to use either the federal or state exemptions. New Jersey current exemptions include: no homestead exemption, but survivor-ship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of a single spouse; 90% of earned but unpaid wages if annual income is under 250% of the poverty level for family size and 75% if annual income is more than that amount; no specific automobile exemption; no wild card exemption; personal property and possessions of any kind, stock or interest in corporations to $1,000 total; and clothing, furniture and household goods to $1,000.

Even when filing the simplest type of bankruptcy, bankruptcy laws can often be complicated and confusing. Contact a bankruptcy lawyer if you are considering bankruptcy. If need relief from the stress of debt and you live in or around the metropolitan area of Jersey City, New Jersey, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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