What Happens When You File for Bankruptcy in New Jersey
What is Bankruptcy?
Bankruptcy laws are federal laws. The bankruptcy laws are located in a federal law book that is called the bankruptcy code. Bankruptcy courts are part of the federal court system, which is separate from the state courts. In New Jersey, there is one bankruptcy court in Trenton, Camden and Newark. The bankruptcy courts are located in the federal court buildings, where all federal cases are handled.
Federal bankruptcy laws are granted power over all state courts. Therefore, if a debtor who files for bankruptcy protection in New Jersey owns real estate in three separate states, the bankruptcy court has control of the property in all states. Sometimes a bankruptcy court will temporarily send a dispute back to the state court for the resolution of an issue, such as child support payments.
In general, bankruptcy deals with personal and business debt, in addition to controlling the actions of creditors regarding the debt. For example, bankruptcy may allow a debtor to avoid eviction because of the nonpayment of debt, but not as a result of playing load music.
How Can Bankruptcy Help Me? (Why File)
Bankruptcy can help a person with the following: permanently eliminate debt; avoid utility shut off; save house from foreclosure; save an auto from repossession; stop residential eviction actions; eliminate all or partial tax debt; ease support or alimony payments; stop debt collection; possibly stop any action that is a result of having not paid a debt; stop a creditor from taking property; immediately stop a creditor from suing someone.
Someone that files for bankruptcy protection is called a debtor. Typically, a debtor will file a chapter 7 case for the purpose of eliminating all unsecured debt, such as credit card debt or personal loans.
Chapter 13 cases are typically filed for the following reasons: save a house from foreclosure; save a car from repossession; eliminate most unsecured debt because the debtor did not meet the chapter 7 criteria. The portion of the unsecured debt that is not paid, is eliminated in a chapter 13.
Typically, a person will file for chapter 11 bankruptcy protection for the same reasons as a chapter 13. However, the person does not meet the chapter 13 criteria because the amount of debt is substantial. Also, a corporation or limited liability company must file a chapter 11 case to reorganize, as they are unable to file a chapter 13. Chapter 11 cases also help businesses with financial issues, continue to operate.
All bankruptcy chapters deal with all of the debtor’s debts and creditors and not just the one debt or creditor that is their major concern. For example, someone may want to file for the sole purpose of avoiding auto repossession, due to payment arrears. However, the bankruptcy laws apply to all of the person’s debt and creditors and not only the auto finance issues.
A person named a trustee is appointed to administer each case. The responsibilities of a chapter 7 trustee are different than chapter 13 and chapter 11 trustee.