New Jersey Bankruptcy Law
New Jersey bankruptcy has both similar and different laws and procedures concerning bankruptcy compared to other states. Although many of the procedures are the same compared to other states, the state of New Jersey has different laws concerning the exemptions a person or family may receive in certain cases.
Many of the New Jersey bankruptcy procedures and laws are intended to help a person rather than push them farther into economic trouble. Simply put, NJ bankruptcy can be harmful to your credit in the short term, but the procedure may prove beneficial in the long run. New Jersey bankruptcy is no easy process though, and citizens of New Jersey are required to take a credit counseling course six months before filing for NJ bankruptcy. They are also required to show evidence of taking a debtor education course before reaching a settlement.
New Jersey Bankruptcy : Personal and Corporate
Both individuals and corporations can file for New Jersey bankruptcy. Individuals or families usually file for NJ bankruptcy under Chapters 7 or 13, while corporations file for Chapter 11.
NJ Bankruptcy Chapter 7
If a person or family has a large amount of debt, they may file for Chapter 7 bankruptcy in the state of New Jersey. However, the chance of going through with a Chapter 7 is less likely in New Jersey than other states. There are a couple of reasons. In order to qualify for Chapter 7 bankruptcy, your median income must fall below the state average. The New Jersey median income is also the highest in the country: at $60,322.
Although a person may even qualify for Chapter 7 in New Jersey, they may choose to go ahead with Chapter 13 anyway. The state doesn’t offer the best exemptions compared to other states either. The following exemptions may apply in NJ:
• No homestead exemption
• $1,000 total in personal property
• 75% of wages unless 250% under the U.S. poverty level
• Limited types of insurance
NJ Bankruptcy Chapter 11
If a corporation is facing economic troubles and needs time to reorganize their finances and logistics, they may opt for Chapter 11 bankruptcy. Personal assets are not available to creditors in Chapter 11 bankruptcies, but the company’s stock may be in trouble if they decide to pursue bankruptcy.
NJ Bankruptcy Chapter 13
If a person or family has steady income and wants to reach a settlement with a creditor, they may try to file for a Chapter 13 bankruptcy. More and more bankruptcies are occurring under Chapter 13 because it’s becoming harder and harder to file for Chapter 7. The main advantage in filing a Chapter 13 involves the family being able to keep the house for the repayment period of three to five years.
Tax returns may be viewed as a valuable asset under Chapter 7, and a creditor will usually try to retrieve those funds from you. If you file for a Chapter 13 bankruptcy, you can mostly likely hold onto your tax returns, but other backed taxes aren’t abolished under normal bankruptcy.
Filing for New Jersey Bankruptcy
It’s always a good idea to hire a lawyer when considering filing for New Jersey bankruptcy. A lawyer will be able to guide you through the proper documents and fees associated with NJ bankruptcy, and they will also be able to advise you when you are meeting with a creditor. New Jersey bankruptcy law is dauntingly complex, and a lawyer will know specificities of the laws.