Those searching for a genie, fairy godmother, or magical star to make dreams and wishes come true about getting rid of their debts may find an answer by filing for bankruptcy. Residents in New Jersey don’t need to believe in fairy tales or mythical creatures in order find relief from their money troubles. A Chapter 7 bankruptcy can relieve you of nearly all of your secured and unsecured debts, allowing you to create the life you have always wanted.
The Low-Down on Filing Chapter 7 Bankruptcy in New Jersey
The families and individuals who live and work in New Jersey know how hard it is to obtain, and hold on to money. Sometimes the weekly paycheck is completely spent on bills the day it is deposited, making it difficult to scrounge enough money up for food and other basic necessities. If you are drowning in debt, feel harassed by creditors, or have a lender threaten you with foreclosure, a Chapter 7 bankruptcy can resolve these issues.
A Chapter 7 bankruptcy is a relatively short process. It lasts approximately six months, requires all debtors attend a short hearing, and involves two debtor education courses. In addition, anyone wishing to file for bankruptcy, Chapter 7 or otherwise must meet the requirements as outlined in the Bankruptcy Reform and Consumer Protection Act of 2005.
The Requirements to Qualify for Chapter 7 Bankruptcy
As the Reform Act mandates, each individual who wishes to file must either pass the means test or fall under the median income level for the state in which he or she resides. The median income level varies by family size, and it the base level can change from year to year. The current average income level for New Jersey is as follows:
- 1 individual: $59,060
- 2 family members: $70,680
- 3 family members: $85,573
- 4 family members: $101,106
- For families over 4 members: debtors must include an additional $7,500 per family member to his/her base income level.
When families exceed the median income level for New Jersey there is still another way to qualify. The means test is a process in which your bankruptcy attorney will take your financial information and mathematically determine whether a bankruptcy will benefit your situation. (The means test usually is in the form of software which every attorney should be well-versed in.) In order to pass the means test, you may be required to supply additional financial information to your attorney. This may include:
- Last six months of you and your spouse’s paystubs
- Last filed tax return
- Complete list of past and current creditors
- Information about personal loans from friends or family members
- Documents pertaining to any mortgages, liens, or other loans
- A detailed list of currently held assets
If your attorney determines you do qualify for bankruptcy through the means test, the next step in the bankruptcy process is to prepare the petition, which is a set of personal financial documents that is filed with the court. In the petition, your attorney will outline what assets are exempt (or withheld) from bankruptcy, allowing you to keep those assets. If you don’t qualify for a Chapter 7 bankruptcy, you may meet the requirements for a Chapter 13 bankruptcy. Please contact your attorney for more information.
Assets Exempt from Bankruptcy, Chapter 7 in New Jersey
Every state in the United States allows for a certain amount of exemptions for bankruptcy. The amount, type, and availability of each exemption vary by state. In some states, along with New Jersey, debtors have the additional option to claim federal or state exemptions. This is a definite benefit because not all states allow residents to choose between the different exemption laws. Many only offer state exemptions.
According to New Jersey state exemptions, residents are allowed to keep the following:
- Homestead exemption: There is no state exemption for a homestead. However, federal law allows up to $21,625 in value for a home or burial plot.
- Personal Property:
- $1,000 of shares, stock or other personal goods
- 100% of household goods and furniture
- 100% of all clothing
- Wages: If the debtor makes less than $48 a week, he/she may claim 100% exemption. If the debtor makes more than $48, but less than $7,500 a year, the debtor can claim 90% exemption. If you make over these amounts, please talk to your lawyer about the specifics for a wage exemption.
- 100% Fraternal Benefit Society benefits
- 100% Annuity contract benefits up to $500 a month
- 100% Worker’s compensation benefits
- 100% Alcoholic Beverage Law Enforcement pension fund
- 100% Unemployment compensation
- 100% Old age assistance payments
- Retirement Benefits:
- 100% Teachers and school district employees
- 100% Judicial Retirement Systems benefits
- 100% Prison officers
- 100% County and municipal employees
- 100% Police and Firefighters
- 100% City Board of Health employees
- 100% Street and Water Department employees
- 100% Crop insurance proceeds
- 100% Group life insurance policies and proceeds
- 100% Health and disability proceeds
- 100% Veterans Administration benefits (including insurance benefits)
- 100% Railroad unemployment insurance
- Also 100% of the following miscellaneous assets are exempt:
- Injury or death compensation payments resulting from war risk hazards
- Wages of seamen while on voyage
- Seamen’s clothing and apparel
- Interests in pension or profit sharing plans for CIA employees
These exemptions can and do change from year to year. It is vital to check with your Chapter 7 bankruptcy attorney prior to filing your petition for the most up-to-date exemptions.
Chapter 7 bankruptcy may not solve all your financial problems, but it has helped many to get a “leg up” in meeting financial responsibilities. Get rid of your bad debt today by talking with a bankruptcy attorney.
New Jersey Bankruptcy Courts
United States Post Office and Courthouse
401 Market Street, 2nd Floor
Camden, New Jersey 08101
Phone: (856) 757-5485
Martin Luther King, Jr. Federal Building
and United States Courthouse
50 Walnut Street, Room 3017
Newark, New Jersey 07102
Phone: (973) 645-4764
Clarkson S. Fisher Federal Building
and United States Courthouse
402 East State Street, 1st Floor
Trenton, New Jersey 08608-1507
Phone: (609) 989-2200