For many people, the decision to file for bankruptcy is emotional. Feelings of low self-worth and failure can arise, but remaining in a constant state of debt can feel even worse. If debt is crushing you, filing for Chapter 7 bankruptcy may give you room to breathe again.
In the first six months of 2021, more than 4,300 people filed for Chapter 7 bankruptcy in New Jersey. That means 4,300 individuals are on their way to healthier financial situations that will improve their lives.
At Schwartz, Hanna, Olsen, & Taus, P.C., we bring more than 80 years of combined legal experience to clients who are seeking a fresh start through bankruptcy. Our names don’t just appear on the letterhead. Each attorney works one-on-one with their clients, providing personalized counsel and guidance.
Our offices are located in Middlesex County, New Jersey. If you’re located in the New Jersey areas of Somerset, Morris, Passaic, Essex, and Bergen counties, or anywhere else in the state, call our offices today.
In a Chapter 7 bankruptcy, all unsecured debt is discharged, meaning you no longer have to pay balances on such things as credit cards, personal loans, and debt incurred for medical treatment. If you own any nonexempt assets, the court may order that they be sold, which is why Chapter 7 is often referred to as the “liquidation bankruptcy.” Proceeds from the sale of these assets would then be divided among your creditors.
In New Jersey, those who wish to file for Chapter 7 bankruptcy are required to complete a credit counseling course. The course certificate is valid for 180 days, so you must file for bankruptcy before it expires. You must then complete a second course on financial management after you have filed but before the court will discharge your debt. These courses are designed to help you make wiser financial choices moving forward.
Chapter 7 will discharge your unsecured debt. It might also discharge secured debt, such as a mortgage or car loan. If so, you will need to surrender your home and vehicle. There are ways to continue paying secured debt which could help you hold onto these items. Your attorney will advise you regarding your ability to retain such assets.
Chapter 7 bankruptcy will not discharge such things as child or spousal support or taxes you owe. Student loan debt is rarely discharged. The court may also refuse to discharge debt you incurred fraudulently, for example, spending up your credit card to buy things before filing for bankruptcy.
Because Chapter 7 discharges debt, unlike other chapters that restructure or reduce debt, you do have to meet some income-related requirements to qualify. Your gross income must be lower than New Jersey’s median income, currently $60,317 for a one-person household.
If your income is higher, you will need to pass a “means test.” You must add up all income and assets you own and subtract all expenses allowed by New Jersey law. If not enough remains to restructure your debt and pay it off in a Chapter 13 bankruptcy, you may file for Chapter 7. You must also not have had your debts discharged in bankruptcy in the previous six to eight years to be eligible.
Chapter 7 may be a good option for many reasons, including:
If your creditors can get a judgment against you (For example: The hospital can sue you for what you owe them plus interest and attorney’s fees. If they get a judgment against you, you cannot discharge that debt in bankruptcy.)
If Chapter 7 will discharge enough of your debt that you will be able to pay remaining debt, your bills, and stay out of debt
If you can find a way to keep certain property, such as your home or car
If you are paying for groceries and other common expenses using credit cards or payday loans
If you can only make minimum payments on credit cards
If you are repeatedly late making payments on debt
If creditors are constantly contacting you about payments
If financial stress is causing problems with your personal relationships, sleep, ability to eat, or other quality-of-life measures, or if it is causing you to abuse alcohol or drugs
Everyone would prefer to have enough money to pay off their debt, but things simply do not work like that for many hard-working people. That is why Chapter 7 bankruptcy is an option under federal and New Jersey laws. If you are ready for relief, contact Schwartz, Hanna, Olsen, & Taus, P.C. to discuss your options. Start breathing again. Call now.