The debtor is required to provide the attorney with documents and information regarding the value of all assets, list of all creditors, income and expenses. (The details of the required documents and information is explained below). Prior to filing, the NJ bankruptcy attorney must obtain the following documents: debtor and household members’ pay stubs or printout of income and deductions for the six months prior to the filing; list of value of all assets, child support order, federal tax returns for the four years prior to the filing, credit report, and, copies of bills and notices. Prior to filing, the debtor is required to obtain credit counseling and a certificate from an approved credit counselor indicating completion of credit counseling. This certification must be filed with the court, upon the bankruptcy filing.

Credit Counseling

Prior to filing, the law requires that the debtor complete credit counseling and obtain a certificate of completion from a court approved counseling agency. The process of credit counseling is generally quick and easy. There are presently numerous court approved agencies, which may be located at http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm. The agencies generally charge $50.00 per person for the counseling. Generally, the individual contacts the agency by telephone or internet. The session may be completed by telephone, internet or in person, in approximately 1 and ½ hours. The counseling is an attempt to assist one in understanding their financial difficulties and make recommendations as to how these matters may be resolved. The counselor will request information, such as your income expenses, assets and creditors. The counselor provides counseling, only, and there is no test required to providing the certification. The court simply requires that you obtain the counseling and a certification reflecting that the counseling was completed.

After the documents are provided, the bankruptcy petition is completed. After the petition is reviewed for accuracy, the debtor signs and dates the petition. Thereafter, the petition is electronically filed with the court. The court will generate notices of the filing to all creditors listed on the petition. Thereafter, the court schedules a 341(a) Creditors Meeting (hearing), which is held approximately one month after the filing.

341(a) Creditors Meeting (first hearing)

The court notifies the debtor and all creditors of the hearing. The debtor and the debtor’s attorney are required to attend the hearing. The creditors may attend the hearing to ask the debtor(s) questions. However, it is unusual for any creditor to appear at the hearing. The hearing is held in a room, which is not a courtroom.

The debtor is required to bring to the hearing proof of identification (i.e. photo driver’s license and a social security card), proof of value of their house, and a mortgage payoff. All other documents, such as proof of income and tax returns should be forwarded to the trustee prior to the hearing. The hearing lasts approximately fifteen minutes. The trustee asks the debtor questions to determine if the debtor is entitled to a discharge based on the requirements explained above. Basically, the trustee makes inquiries about your assets to determine whether he can sell an asset for the benefit of any creditors. Furthermore, the trustee inquires as to whether a debtor is able to pay back a portion of their debt…

If the trustee believes that the debtor met all of the requirements explained above, and that further investigation is not required, he/she will recommend to the court, that the debtor receive an order of discharge.

Financial Management Course

Within 45 days after the 341(a), Creditors’ Meeting, the debtor(s) are required to complete a Personal Financial Management Course and file with the court a certification of completion. This requirement is similar to the credit counseling requirement. The debtor must use a court approved counseling agency from the same court approved list. The course may be completed by internet, in person, or by mail, and lasts about one to three hours. The course counsel’s debtors’ about money managing skills. The course is only for informational purposes. There is not test and you cannot fail.

If the trustee recommends that the debtor should receive a discharge, the debtor should receive an order of discharge approximately 120 days after the filing of the petition.

Although unusual, the trustee may delay the discharge and process for the purpose of further investigating certain assets to determine their value and sale worthiness. Again, although unusual, if the trustee obtains court approval to sell an asset for the benefit of the creditors, he/she will notify the creditors of same. Thereafter, the trustee may sell the asset and disburse the proceeds pursuant to the bankruptcy laws. Generally, under this scenario, if you meet the requirements, set forth above, you may obtain a discharge prior to the sale. Please note that there are various options to avoid the unexpected sale of an asset.