What Happens With Bankruptcy in New Jersey?

Means Test

• In 2005, the federal Bankruptcy Abuse Prevention and Consumer Protection Act instituted a means test that determines who qualifies for Chapter 7 bankruptcy. Under the means test, each state has an income cut-off level. In New Jersey, you must make less than $60,000 a year alone or under $103,000 if you are in a family of four to qualify for Chapter 7 bankruptcy. Otherwise, you would be required to file for Chapter 13 bankruptcy protection.
  
  

Filing for Bankruptcy

• Although New Jersey does not require you to hire an attorney to file bankruptcy, it can be useful. You first need to complete paperwork known as a Statement of Financial Affairs that includes all of your creditors, your income and your living expenses. According to the U. S. Bankruptcy Court District of New Jersey as of April 2010, you must pay a filing fee of $299 for Chapter 7 bankruptcy or $274 for a Chapter 13 bankruptcy when you submit the paperwork to the courts.
  
  

Keeping Property

• If you file for Chapter 7 bankruptcy in New Jersey, you can keep some of your property. Two options are available. With Option A, you can keep your home (up to $20,200), your car (up to $3,225), life insurance policies that have not matured, jewelry (up to $1,350), pension benefits and equipment needed for your job (up to $20,200). Under Option B, you can keep up to $1,000 in stocks, household items up to $1,000, funeral plots, some disability benefits and property from business partnerships.
  
  

Reorganizing Debt

• If you choose to file for bankruptcy protection Chapter 13 in a federal court located in New Jersey, you must have no more than $1,010,650 in secured debt, such as mortgages or car loans. You also need less than $336,900 in unsecured debt, such as personal loans or credit cards. With this type of bankruptcy, the trustee determines the amount of your disposable income based on your Statement of Financial Affairs and sets an amount for you to pay monthly directly to the courts for the next three to five years.
  
  

Non-Dischargeable Debt

• Under New Jersey and federal law, some types of debt cannot be discharged through bankruptcy. These types of debt include student loans, court-ordered spousal or child support, debts that were not listed properly by the filer and taxes. Debtors can also reaffirm their debt with specific creditors. For example, if you want to keep your automobile, you would sign an agreement with the finance company stating your desire to continue paying on the debt.