Bankruptcy in Newark, NJ

Are you contemplating bankruptcy or hiring a bankruptcy attorney in Newark, New Jersey? Are you tired of creditors calling for payments you can’t make? Maybe looking for a way to get out of debt and have you exhausted all other options? Then bankruptcy might be the solution you seek. It is a legal option that can erase a portion or all of your debts.

Types of Bankruptcy in Newark, New Jersey

Bankruptcy is a legal process that helps individuals and businesses get a fresh financial start. It eliminates a portion of or all of their debts or financial liabilities. In Newark, NJ to be approved, individuals must prove they have a hardship that prevents them from staying current on their financial obligations. Keep in mind that not all debts qualify. Some liabilities, such as child support arrears, delinquent taxes, alimony, and student loans generally do not qualify for discharge. Consumers who find themselves falling behind in debt can file either Chapter 7, 11 or 13. To determine which option is right for you, you’ll need to assess your goals, assets, and income. You should also consider working with an experienced bankruptcy attorney.

These legal concerns can require interactions with the U.S. Bankruptcy Court of the District of New Jersey. For Newark residents, a summons may come from the Martin Luther King, Jr. Federal Building.

Chapter 7 Bankruptcy

Many people find Chapter 7 to be the right solution for their circumstances because it provides them with the opportunity to start over financially. However, before filing for Chapter 7 bankruptcy, you should thoroughly assess your income and ability to repay what you owe. You should also speak with a bankruptcy attorney in Newark  who can help you to decide if a liquidation plan is right for you.

Typically, individuals approved for Chapter 7 lack stable income or have experienced a change in circumstances that has resulted in an inability to manage their debts. Though Chapter 7 erases debts, the tradeoff is you may have to give up certain possessions, such as your home, car or some other assets. However, once you file your petition, an automatic stay goes into effect that requires all collection activity against you like foreclosures and garnishments, to stop temporarily. However, the automatic stay does not prevent all collection attempts. For example, if you owe child support or restitution for a criminal case, you are still liable for those payments.

The U.S. Bankruptcy Court of the District of New Jersey provides forms for Chapter 7 on its website. If information is incomplete or inaccurate, you may have to petition and pay the $338 filing fee again. Additionally, most consumers go through credit counseling and means-testing 180 days before filing.

The Department of Banking & Insurance provides a list of state-approved credit counseling services. One of the options available in Newark is New Jersey Citizen Action. Engaging in this process can help you decide if Chapter 7 or otherwise is in the best interests of your long-term plans.

Finally, means-testing, which you must also endure, is the responsibility of the U.S. Department of Justice. The agency compares tax returns and U.S. Census numbers to determine your eligibility for bankruptcy. You may not qualify if you make more than the median income in Newark of $22,388 for individuals and $34,825 for households.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is more complex than other types of bankruptcy. It is often used by businesses and certain types of people. It allows petitioners to restructure their debts with a reorganization plan, so they are easier to manage over a determined length of time, usually four to 18 months. The main benefit of Chapter 11 bankruptcy is that it does not require petitioners to sell off or liquidate their assets to pay what they owe. It does allow debtors to negotiate with their creditors a reorganization plan that enables them to stay current on their debts moving forward.

Newark debtors interested in understanding what you need for a Chapter 11 plan can download one from the U.S. Bankruptcy Court. A business will use this relief to stay in business while revamping its efforts, but an individual can take advantage of the same benefits. However, this may be easier to achieve for someone who has a sole proprietorship or a partnership in a company.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a debt restructuring or wage earners plan. In Newark, NJ after you file, the courts will assign a trustee to examine your liabilities and assets and ability to pay bills. Unlike other types of bankruptcy, Chapter 13 involves you restructuring your debt with a three to five-year repayment plan. The flexibility of this repayment plan will depend on what property you want to keep and how steady your income is. It may also give you the opportunity to have some or most of your debts discharged.

The U.S. Bankruptcy Court of the District of New Jersey states that a Chapter 13 Plan needs to provide the following:

  • Regular payments to a trustee
  • Equal monthly installments that go to creditors
  • Equal treatment of claims, if they require classification
  • Complete payment of each claim, including child support and taxes

The Bankruptcy Process in Newark, New Jersey

There is never an ideal time to declare bankruptcy. However, if you are unable to pay off what you owe within five years, filing for bankruptcy can help you to lessen the negative impact on your situation and help you get back on track.

In Newark to begin the filing process, gather all of your financial records, including monthly expenses, debts, assets and annual income. This information is crucial to give the courts an accurate picture of your circumstances. Failure to provide all necessary information can result in your petition being denied.

Newark residents going through bankruptcy can choose from federal or state exemptions. The decision usually comes down to which one provides the most advantages for your circumstances. For example, New Jersey law is unusual because it does not give a homestead exemption to protect your house. As of 2019, the National Consumer Law Center reports that U.S. Code allows for up to $25,515 in home equity. However, if you do not own property and see more advantages with the state government option, that may be your best course of action.

At least six months before you file for bankruptcy, eliminate unnecessary spending. Do not run up the balances on your credit accounts. You’ll also need to complete an approved credit counseling course, usually online or over the phone. Credit counseling is necessary to help you learn financial literacy and help you learn better financial habits. Once you complete the course, you’ll receive a certificate of completion to include in your filing. If you don’t have the certificate of completion from the credit counseling course that you took, the courts will reject your bankruptcy petition.

Work With an Experienced Newark, New Jersey Lawyer

Hiring a local bankruptcy lawyer in Newark during this process can help reduce the costly risks of self-representation in court. An experienced bankruptcy lawyer understands state and federal bankruptcy laws. He or she can help you understand which laws apply to your case, especially which debts that can be discharged or can’t be discharged. An experienced New Jersey attorney can also offer you guidance to improve the outcome of your case.

Keep in mind that there are debt management alternatives and financial resources that may benefit you more than bankruptcy, such as debt consolidation. Though bankruptcy is an attractive solution, it is best as a last resort. Do you need immediate help? Then one of our experienced lawyers in Newark can guide you through the entire bankruptcy process. We can even help you connect with an attorney across New Jersey state lines.

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