Chapter 7 bankruptcy can give New Jersey families a new start

Some individuals who feel as though they are drowning in a sea of debt may be contemplating bankruptcy; however, choosing to file is not always an easy decision to make. While some are scared by the thought of having to seek bankruptcy protection, others may feel a sense of shame. Bankruptcy, however, does not carry the stigma that it used to. In fact, bankruptcy can help individuals who have run into financial hard times find a way to start over.

When it comes to filing for personal bankruptcy protection, individuals have a choice of the type of filing that can be made. Depending on a person's exact financial circumstances, he or she can choose to file for Chapter 13 or Chapter 7 protection. Chapter 13 is often used by those who have a steady stream of income and want to repay their debts over a certain period of time. Chapter 7, however, is typically used by those who want to start their financial lives over with little to no unsecured debt.

What must be done before filing Chapter 7

According to the United States Bankruptcy Court, District of New Jersey, all individuals who want to file a Chapter 7 bankruptcy petition must receive credit counseling from an approved agency prior to filing. The counseling must occur within 180 days before submitting the petition.

There are a few other things that individuals should keep in mind with respect to the credit counseling requirement, such as:

  • The counseling session may be done over the phone, via the Internet or in person.
  • Upon completion of the counseling course, a credit counseling certificate will be issued and that certificate must be filed with the bankruptcy court at the time the petition is filed.
  • Individuals must also file an Individual Debtor's Statement of Compliance with Credit Counseling Requirement form along with the certificate.

Individual filers should also be aware that they will also have to complete a personal financial management course after the bankruptcy petition has been filed, prior to receiving a discharge of their debts.

Eligibility for Chapter 7 bankruptcy protection

The U.S. Courts say that in order for a person to file for Chapter 7 bankruptcy relief, he or she must pass a "means test." More specifically, if an individual's income is higher than New Jersey's median income, he or she may not be allowed to file Chapter 7. Additionally, if a person has received a discharge under a previous Chapter 7 filing that was made in the past eight years, he or she may not be eligible to file.

Those who have concerns or questions about Chapter 7 or the bankruptcy process in general are encouraged to seek legal advice from a knowledgeable lawyer.