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New Jersey Bankruptcy Laws

New Jersey Bankruptcy Laws should be known by every resident of the state of New Jersey. One can never tell when disaster strikes. One of the best protections you can employ when these disasters happen is to recognize the value of knowing the various debt management options and what this knowledge may bring. Every citizen should know that New Jersey bankruptcy laws are under the jurisdiction of the United States Bankruptcy Code and the local bankruptcy courts of the state.

Perhaps even more important is the fact that bankruptcy protection is invoked only during dire circumstances when the debtor has no other way out of mounting debts. This is also emphasized by the federal bankruptcy courts all throughout the country through its implementation of the credit counseling program. This counseling should be taken 180 days before the formal application of bankruptcy protection to ensure that the debtor’s decision is final. The organization conducting the seminar should be accredited by the state of New Jersey and during the application for bankruptcy, a certification should be included together with the various requirements.

For the ordinary citizens who have to struggle through their monthly dues and mortgages, Chapter 7 is most appropriate. This bankruptcy program is also known as liquidation because during the formal petition, a detailed list of all your assets will be given to the court. The trustee assigned to your case will then determine which of these items will be liquidated to pay off your debts. There are certain exemptions imposed by the federal laws, as well as the state-specific exemptions, which will be discussed below. The greatest downside of New Jersey bankruptcy exemptions is the no-homestead-exemption policy. This means that if worse comes to worst you will lose even your house to the creditors. This can be liquidated and added to pay off the creditors as deemed necessary by the trustee. In this case, the phrase “fresh start” will have no meaning since you will stand to lose everything that represents stability.

Although you may not qualify for Chapter 7 because of your monthly income that registered higher than most New Jersey citizens are earning based on the latest data from the US Census Bureau, you may opt to consider or you will be involuntarily enrolled for Chapter 13 bankruptcy protection.

This program will implement a debt restructuring program to give debtors the chance to pay all their debts in a 5-year period at a maximum. This is outlined in the repayment plan the court asks every debtor to submit during application. It is the duty of the court-appointed trustee to oversee the implementation of this plan once approved by the court. The debtor sets aside a portion of their monthly regular income to give to the trustee who in turn, will distribute it among the creditors according to the priority structure set by the bankruptcy court.

As mentioned earlier, majority of the states in the country offer homestead protection; however, New Jersey bankruptcy laws do not provide for any homestead exemption. The following is a partial list of the exemptions allowed by the state:

• Furniture and household goods with a total of $1,000;
• Personal property amounting to $1,000;
• 90% of wages for individuals with an income of less than $7,500 per annum; if the income is more than this amount, the judge determines the amount of wage exemption; and
• Other benefits like public compensation, public employees’ pension and health insurance.

Before making up your mind, talk to a lawyer or a financial expert. You never know, you may have other options aside from bankruptcy.