NJ. Attorney Explains Who Can File For Bankruptcy Protection.
Virtually anyone can file for bankruptcy protection in New Jersey. Typically, the issue is not if one can file, but rather which bankruptcy chapter is applicable based on the debtor’s financial situation and goals.
The following information pertains to a New Jersey chapter 7 case.
A person, corporation, partnership, limited liability company and a small corporation may file for chapter 7 bankruptcy protection.
A New Jersey Chapter 7 bankruptcy does not require a person to make any payments and lasts about four months. In approximately four months, after the filing, a person is completely out of the bankruptcy case, with certain debts discharged. There is no maximum or minimum debt amount required to file. The bankruptcy code does not require that a debtor amass a specific amount of debt to file for chapter 7 bankruptcy protection.
However, in order to obtain a discharge, a debtor(s) must meet the chapter 7 criteria. The general chapter 7 criteria is as follows:
1. The debtor does not own any assets with a substantial value, unless he understands that the trustee may sell the asset;
2. The debtors’ monthly average gross household income, for the six months prior to the filing, is less than the average monthly gross income of a household of that size, in New Jersey; However, in the event that the debtor’s household income in more than the average, he may still meet this criteria, if his allowable necessary and reasonable household expenses, exceed his household’s income.
3. The debtor’s projected household net monthly income is less than the household’s reasonable and necessary monthly expenses.
4. The reason for the debtor’s financial situation must have been unintentional
The following information pertains to a New Jersey chapter 13 case.
Only a person may file for chapter 13 bankruptcy protection in New Jersey. A person, corporation, partnership, limited liability company and a small corporation may not file for chapter 13 bankruptcy protection. Chapter 11 is the appropriate reorganization chapter for such entities in New Jersey. Additionally, a chapter 13 debtor must earn regular income, that is sufficient to make the monthly trustee payments.
A New Jersey Chapter 13 bankruptcy has a debt limit that is distinguished from a chapter 11 bankruptcy case. A debtor can file for New Jersey chapter 13 bankruptcy protection, if their unsecured debt is less than $394,725 and their secured debt is $1,184,200. Please note that said figures periodically change. Unsecured debt is debt that is not connected to any property, such as a personal loan, credit card debt, and medical debt. Secured debt is debt that is attached to property, such as a mortgage and a car loan.
Although extremely unusual, if a person’s debt is in excess of the above stated amounts, he may be able to reorganize through a chapter 11 bankruptcy case. Please note that an experienced attorney can argue that certain debt may be secured and/or unsecured based on various circumstances.
A New Jersey chapter 13 case requires a person to make monthly payments to a trustee. The amount of the payment, depends on the person’s household income, expenses and the reason for the filing.
The most typical reasons for a chapter 13 bankruptcy filing are as follows:
1. Pay funds to creditors as a result of not meeting the chapter 7 criteria;
2. Saving a house from foreclosure by paying back the arrears, or seeking a loan modification;
3. Saving an auto from repossession, by paying the arrears, or otherwise making payments on the auto.
4. Avoid eviction by paying the rental arrears through the bankruptcy plan;
5. Paying a debt that is not “dischargeable” in a chapter 7 case.
Contact the NJ. Bankruptcy lawyer, Robert Manchel at 866 503 5644.