About Bankruptcy Law in New Jersey, United States
Bankruptcy is a federal legal process designed to help individuals and businesses struggling with overwhelming debt find financial relief. In New Jersey, bankruptcy law is governed by federal statutes, primarily the United States Bankruptcy Code, but certain aspects are influenced by state-specific rules. Bankruptcy offers different options, known as chapters, for debt relief. The most common types for individuals are Chapter 7, often referred to as "liquidation," and Chapter 13, known as "repayment plan." Businesses may also use Chapter 11 for reorganization. Filing for bankruptcy in New Jersey allows debtors to seek protection from creditors, stop collections, and potentially achieve a fresh financial start.
Why You May Need a Lawyer
Bankruptcy law is complex and mistakes can lead to loss of assets or case dismissal. You may need a lawyer in situations such as:
- Receiving lawsuits, wage garnishments, or foreclosure notices
- Facing creditor harassment or aggressive debt collection
- Struggling with unmanageable credit card debt, medical bills, or personal loans
- Being unable to negotiate affordable payment plans with creditors
- Running a small business facing insurmountable debt
- Needing advice on which bankruptcy chapter to file
- Filing a complicated case or having significant assets to protect
A qualified bankruptcy attorney can assess your situation, explain your options, help navigate complex paperwork, and advocate for your best interests in court.
Local Laws Overview
While bankruptcy is governed primarily by federal law, New Jersey has its own set of exemptions and unique legal procedures:
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Exemptions: In New Jersey, you may choose between federal or state exemptions to protect certain assets like your home, car, clothing, and retirement accounts. New Jersey state exemptions tend to be less generous than federal exemptions, so consulting a lawyer is critical to maximize protection.
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Homestead Exemption: New Jersey's state homestead exemption is limited, often requiring individuals to use federal exemptions to protect equity in their primary residence.
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Bankruptcy Courts: Bankruptcy cases in New Jersey are filed in one of the three United States Bankruptcy Court divisions located in Newark, Trenton, or Camden, depending on the debtor’s county of residence.
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Means Test: Eligibility for Chapter 7 bankruptcy is determined by a "means test," which compares your household income to the state median, adjusted annually and unique to New Jersey's cost of living.
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Property and Asset Protections: New Jersey law also governs property types not covered by federal exemptions, such as certain life insurance policies and pension benefits.
Frequently Asked Questions
What is the difference between Chapter 7 and Chapter 13 bankruptcy in New Jersey?
Chapter 7 allows for the liquidation of non-exempt assets to pay off unsecured debts, while Chapter 13 sets up a court-approved repayment plan over three to five years, helping protect property from foreclosure.
Will I lose my home or car if I file for bankruptcy in New Jersey?
It depends on your available equity and the exemptions you claim. Many filers can protect their home and vehicle by using federal exemptions or by filing Chapter 13, which allows you to catch up on missed payments.
How much does it cost to file bankruptcy in New Jersey?
As of early 2024, filing fees are approximately $338 for Chapter 7 and $313 for Chapter 13. Attorney fees are additional and vary based on the complexity of your case and your attorney's rates.
How long does bankruptcy stay on my credit report in New Jersey?
A Chapter 7 bankruptcy remains for ten years, while a Chapter 13 remains for seven years. However, credit scores may start to improve as debts are discharged.
Can bankruptcy stop foreclosure or repossession in New Jersey?
Yes, filing for bankruptcy triggers an "automatic stay," temporarily halting most collection efforts, including foreclosure and vehicle repossession. Chapter 13 can offer a longer-term solution to keep your property.
Are all debts discharged in bankruptcy?
No. Certain debts, such as most student loans, child support, alimony, and recent tax debts, are usually not dischargeable in bankruptcy.
Do I have to attend court in New Jersey if I file bankruptcy?
Most cases require at least one appearance at a "341 meeting of creditors," which is not a formal court hearing but rather a meeting with the bankruptcy trustee.
How do I choose between state and federal exemptions?
You must choose one set of exemptions and cannot mix. A bankruptcy attorney can explain which set best protects your assets, based on your unique financial situation.
Can I file bankruptcy without a lawyer in New Jersey?
You can file on your own (pro se), but bankruptcy law is complex, and mistakes can be costly. Hiring a lawyer is strongly recommended for most people.
How long does the bankruptcy process take in New Jersey?
Chapter 7 cases typically take three to six months from filing to discharge. Chapter 13 cases last three to five years, depending on your repayment plan.
Additional Resources
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United States Bankruptcy Court - District of New Jersey: This is where all bankruptcy cases in the state are filed.
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New Jersey State Bar Association: Offers referrals to qualified bankruptcy attorneys and general legal resources.
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Legal Services of New Jersey: Provides free or low-cost legal help to eligible residents.
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New Jersey Law Library: Access to bankruptcy guides and related legal materials.
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Federal Trade Commission: Offers consumer information about dealing with debt and bankruptcy.
Next Steps
If you are facing financial hardship and think bankruptcy may be right for you, consider taking the following steps:
- Gather financial documents, including income statements, bills, loan documents, and asset records.
- Consult with a qualified bankruptcy attorney in New Jersey to discuss your options.
- Research available exemptions to understand what assets you can protect.
- Attend a free consultation, if available, to get an overview of your case and estimate costs.
- Stay informed by using the resources listed above for additional help and guidance throughout the process.
Careful planning, supported by professional legal advice, gives you the best chance of a successful bankruptcy outcome and a fresh financial start.
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Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation.
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