Are you overwhelmed with bills you cannot afford to pay? Are you thinking about filing bankruptcy in New Jersey but wonder how it works?
Bankruptcy offers you the chance to get rid of your debt and begin again financially. While most people know that bankruptcy is a way to eliminate debt, few understand the actual bankruptcy process.
Not knowing what to expect during the bankruptcy process can make the idea of filing very frightening-which it does not have to be. With the help of the experienced and compassionate New Jersey bankruptcy lawyers Bruce Levitt and Shelley Slafkes, you can usually go through the process with ease. In fact, over the years we often hear from clients that the process of filing bankruptcy in New Jersey was much easier than they thought it would be.
At Levitt & Slafkes, P.C., we represent clients in Chapter 7, Chapter 13, and Chapter 11 bankruptcy. If you are filing bankruptcy in New Jersey, we will help you get through the entire process and see your case through to its conclusion.
The information in this article is a general overview of the steps involved with a typical Chapter 7 or Chapter 13 bankruptcy. Each bankruptcy is unique, and the process can vary based on the specific facts of your case.
The Nine Steps in the NJ Bankruptcy Process
There are generally nine steps in a New Jersey bankruptcy from beginning through discharge. This blog will explain what to expect during the New Jersey Bankruptcy process, as well as your legal options. You must remember that each person’s situation is unique.
Step 1. Find an Experienced NJ Bankruptcy Lawyer
The first step in the bankruptcy process is to find a qualified NJ bankruptcy attorney. While you can certainly read about the bankruptcy process online, much of the information may be incorrect or misleading. That makes it very important to discuss your situation with an experienced bankruptcy attorney to decide whether filing bankruptcy is right for your particular situation. Indeed, you don’t want to make your financial troubles worse by putting off dealing with your problems, transferring assets to a friend or family member, or paying off the wrong creditors.
Step 2. Collect Your Documents
Once you find the right bankruptcy lawyer, the next step in the bankruptcy process entails gathering all the relevant documentation. Certain documents will be needed so that your bankruptcy lawyer can determine whether or not you are a good fit for bankruptcy, as well as which type of bankruptcy (Chapter 7 or Chapter 13) is right for you. These documents are also required to prepare the bankruptcy petition.
These important documents include:
- Last 2 years State and Federal Tax Returns
- Proof of income for the last 6 months for you and your spouse. This proof includes pay stubs, proof of unemployment, pension, self-employment income.
- Recent bank account statements
- Valuations or appraisals on all real estate that you own
- List of all your assets
- Budget information
Step 3. Take a Credit Counseling Course
Within 180 days before filing for bankruptcy in New Jersey, every individual must take a credit counseling course. This is required before you file a Chapter 7 or Chapter 13 bankruptcy. The course, which can be taken online or on the phone, must be taken through a credit counseling agency that is approved by the Department of Justice. When you finish the course you will get a Certificate of Completion which must be filed with the Court.
Step 4. Preparing the Bankruptcy Petition
Preparing the bankruptcy petition is the most complicated step in a New Jersey bankruptcy. The petition is a detailed document containing many required forms that set forth your assets, income, and outstanding debts.
To prepare this document, your New Jersey bankruptcy attorney will ask you many details about your financial situation and will review the documents which you provided. At Levitt and Slafkes, P.C. we will work with you to gather all the necessary information to make sure everything is correct.
Step 5. Filing the Bankruptcy Petition
Once you give us all the necessary documents and take the Credit Counseling course, we file your petition with the bankruptcy court. Your bankruptcy case begins when a petition is filed. The current court charges for filing a Chapter 7 bankruptcy in New Jersey are $338.00 for and $313.00 for a Chapter 13 bankruptcy.
- Chapter 13 Repayment Plan:
If you’re filing for Chapter 13, we will prepare the Repayment plan that is filed with your bankruptcy petition. The Plan states how much you will have to pay to the Bankruptcy Trustee each month over the next 3 to 5 years and how it will be distributed to your creditors.
Step 6. Protection under the Automatic Stay
The minute your bankruptcy petition is filed, the automatic stay goes into effect. This provides immediate emotional relief to the often-endless phone calls and other harassment from your creditors. The automatic stay also stops all collection activities including phone calls, wage garnishment, lawsuits, and car repossessions. During the automatic stay, your creditors are only allowed to contact your bankruptcy attorney. All the never-ending, harassing collection calls should stop.
Step 7. 341 Meeting of Creditors
About a month or so after your bankruptcy is filed, you must attend a 341 meeting, also called a meeting of creditors. This meeting is run by the Bankruptcy Trustee who is appointed by the court.
The main purpose of this meeting is for the Trustee to verify your identity and ask you questions under oath about your assets, income, etc. One of the attorneys at Levitt and Slafkes will attend the meeting with you. Don’t worry, most times no creditors come to the meeting. It is usually a quick and painless process which usually lasts less than 15 minutes. We know it sounds scary but don’t worry, the lawyers at Levitt and Slafkes will prepare you for this meeting.
Step 8. Complete a Debtor Education Course
In order to get the discharge, you must take a debtor education course, either online or on the phone. The Certificate stating that you completed the course must be filed with the Bankruptcy Court before you can get your discharge. Many clients tell us this course is helpful since it discusses how to create a budget and how to be smart about using credit.
Step 9. Your Debts are Discharged
After all of this, your debts will be discharged. When a debt is discharged you are forever released from any liability on the debt. Bankruptcy wipes away your debt and removes your obligation to pay eligible debts. It is important to remember that you must still make your alimony and child support payments even after you get your discharge. If you’re wondering how long bankruptcies take, it’s important to note that each bankruptcy case is different even though the general bankruptcy process remains the same.
However, here are some common timelines for your reference:
- Chapter 7 Discharge: About 60 days after the 341 meeting most people get their Chapter 7 discharge.
- Chapter 13 Discharge: If you file Chapter 13 bankruptcy, your remaining eligible debts will be discharged at the end of your payment plan if you have made all your required payments. The payment plan lasts from 3 to 5 years depending upon your particular situation.
Get a Fresh Start With a New Jersey Bankruptcy
After your debts are discharged you will have a fresh start. Although many people think that filing for bankruptcy is a difficult and scary process, it generally is not. With the help of an experienced, honest, and compassionate NJ bankruptcy lawyer it becomes simple.
Filing bankruptcy is a major life decision that must be made with seriousness and in good faith. The attorneys at Levitt & Slafkes, P.C. can help advise you on a debt relief plan that best suits your needs, whether this means working with creditors or filing for bankruptcy relief. We work tirelessly to provide our clients with supportive, thoughtful representation.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.