New Jersey Chapter 7 Bankruptcy Lawyer

Chapter 7 Personal Bankruptcy Attorney in New Jersey

Chapter 7 for individuals is designed for debtors facing financial difficulty who do not have the means to pay their existing debts. In many cases, this type of bankruptcy can be triggered by an adverse scenario — like divorce, illness, unemployment, student loans, or an unexpected lawsuit. These circumstances will often lead to assets being seized — which is why it is extremely important to hire an experienced lawyer who can protect your assets.

If you meet any of the following criteria, filing for Chapter 7 personal bankruptcy protection may be the best solution for you if:

  • You are unable to pay high credit card debt or medical bills.
  • You have repossession deficiencies on vehicle loans.
  • You are losing income because of wage garnishment.
  • You are dealing with harassment or threats of lawsuits from creditors.

Call us today at (609) 400-1302 to schedule your free debt relief and chapter 7 bankruptcy consultation.

Filing Chapter 7 Bankruptcy in New Jersey

As an individual who is facing mounting debt without any idea about how to begin to pay off your creditors, bankruptcy might be the right choice for you.  Chapter 7 bankruptcies involve the liquidation of all non-exempt property of the debtor, which is sold and the proceeds used to pay off some of the debts of the bankruptcy filer.  After this has been done, the remaining debts are discharged and the debtor is no longer responsible for any of them.  Most bankruptcy filers in Kansas are able to keep their property as part of the state exemptions.

In order to start a Chapter 7 action, the debtor files a Petition in the bankruptcy court, along with the required schedules and other documents. Once the action has been commenced, a trustee is assigned to the case, along with a bankruptcy judge.  The trustee’s first action is to call a Section 341 meeting, where all the creditors of the debtor are invited and the debtor has to appear and answer questions.  Although technically the creditors may have the debtor answer questions under oath, this initial meeting usually serves as the place where the trustee can get clarification about anything contained in the initial filing.

A Chapter 7 filing is not available to everyone.  In order to file, a person must qualify under the Means Test.  If the debtor does not meet the requirements, then he will have to file a Chapter 13 where a repayment plan is necessary.  The Means Test is comprised of three parts, including the calculation of the debtor’s monthly income, the actual means test where allowable deductions are deducted from the debtor’s calculated income, and then a comparison with the total debt.

Calculating the Current Monthly Income

The current monthly income (CMI) is the average of the gross income of the debtor over the previous six months, starting the month before the filing date, before there are any taxes taken out or other allowed deductions made.  The calculation of the CMI includes:

  • All salary and wages;
  • Income from any interest in a business or corporation;
  • Income from rent or real property;
  • Retirement or pension income;
  • Payment of any interest, royalties, or dividends;
  • Child support payments;
  • Unemployment benefits; and
  • Money from family and friends to be used for debtor’s expenses.

There are some funds that are excluded from the CMI calculation, including social security payments, social security relate unemployment payments, and compensation for victims of crimes.

The calculated CMI is then compared to the state’s median income, as well as the county median in which the debtor resides.  The office of the United States Trustee publishes these median income numbers.  These figures vary based on the debtor’s family size as well as the county or state in which the debtor resides.  If the debtor’s CMI is less than the applicable median income, then the debtor may file a Chapter 7 bankruptcy.

The Means Test

If the debtor’s CMI is higher than the relevant income, then the analysis moves to the second step, which is the Means Test.  This process takes the CMI and then applies a series of expense deductions based on bankruptcy law.  The deductions include actual expenses as well as allowed deductions.  The allowed deductions are set by the Internal Revenue Service (IRS) and must be the established figures and not actual amounts from the debtor’s life.  These allowed deductions include limited charitable payments, taxes, elder care, health insurance, child support payments, and alimony.

In addition to the allowed deductions, there are established expense deductions such as mortgage payments, car payments, and health care expenses where the debtor can claim the expense deductions if they are higher than the actual payments being made.  Certain expenses, such as contributions to a retirement plan or student loan payments, typically cannot be deducted.

Debt Comparison

After the means testing, it is necessary to compare disposable income over the next five years for the dinner.  If the debtor has less than $6,000.00 over the next five years, then the debtor may file for Chapter 7.  If the debtor has between $6,000.00 and $10,000.00 in disposable income over the next five years, then that income must be less than twenty-five percent (25%) of the total unsecured claims in order for the debtor to be able to file a Chapter 7 action.  If the disposable income figure is more than $10,000.00 then the debtor will not be able to file a Chapter 7 case.

Means Testing is not Required for Everyone

There are some people who believe that they do not qualify for Chapter 7 bankruptcy based on erroneous information or a misinterpretation of the general rules.  There are people who do not have undergo means testing, including:

  • Consumer debtors whose debts are mostly non-consumer business debt;
  • Disabled veterans who incurred the debt at issue during active duty;
  • National guard members or reservists under certain circumstances; and
  • Chapter 7 actions for businesses.

Impact of Previous Bankruptcy Actions in New Jersey

Many people believe that they are not eligible to file for Chapter 7 or 13 based on a previous bankruptcy filing.  Although there are limitations, it is possible to file another case.  The debtor may file a Petition for Chapter 7 eight years after he or she filed a Chapter 7 action in which a discharge of debt occurred.  The time period runs from the date of filing of the two cases.  In addition, if the debtor filed a Chapter 13 action previously, he must wait six years before filing for Chapter 7.

Secured Debts

There are debts that are secured by collateral that can be repossessed by the creditor, including residences on which there is a mortgage and vehicles where the debtor took out a purchase money loan.  In a Chapter 7 action, there are three possibilities for this type of debt:

  • Surrender – The debtor may turn the property back over to the creditor in exchange for the discharge of the remaining debt. In a Chapter 7, the debtor cannot surrender the debt but retain possession of the property.
  • Redemption – In this process, the debtor can buy the property for the fair market value (FMV) rather than the amount owed on the property. In this option, the debtor pays the creditor the FMV and the remainder of the debt is discharged.
  • Reaffirmation – The debtor may choose to keep the property and continue to make payments on it under the terms of the original agreement or similar terms. This means that the obligation survives any Chapter 7 discharge and the debtor reaffirms the debt.  In order to choose this option, the debtor must be current on the loan, or very close to current, when he files the Chapter 7.


There are exemptions provided under the Bankruptcy Code, where property is protected from creditors and cannot be sold by the assigned trustee.  Although there is a list of federal exemptions, Kansas, as well as neighboring Missouri, have opted-out of the federal exemptions and state exemptions apply to filings in these states.

The exemptions that apply are the state of domicile for the two years prior to the bankruptcy filing, generally.

Debts that cannot be Discharged

Although many debts can be discharged in a Chapter 7 action, there are debts that are excluded, including child and spousal support, student loans, certain tax obligations, unreported debts, debts incurred through fraudulent actions, restitution payments, payments related to injury or death for which the debtor was responsible while operating a vehicle under the influence of drugs or alcohol, and court fees.  Many of the debts that cannot be discharged relate to obligations to governmental entities.  However, if the debtor purchased luxury items or made cash withdrawals exceeding $750.00 within a specified period of time before the bankruptcy filing, then those debts will not be discharged in most cases.

Free New Jersey Bankruptcy Chapter 7 Consultation – A Fresh Start

New Jersey Chapter 7 Bankruptcy Attorney Andrew M. Carroll is committed to ensuring each of our clients receives unparalleled legal representation.  Attorney Carroll will fully explore your bankruptcy options and select the best means of helping you achieve a bright financial future.

Call us today at (609) 400-1302 to schedule your free debt relief and chapter 7 bankruptcy consultation.

New Jersey Chapter 7 Bankruptcy Attorney Andrew Carroll Can Answer All of Your Questions

Although this is provides some general information, the bankruptcy process is very complicated and it requires an experienced attorney to explain all the nuances and help you prepare a filing that will ensure that you achieve all the benefits that the bankruptcy filing is supposed to provide.

To schedule an appointment to discuss your situation, please call us today at (609) 400-1302 to schedule your free debt relief and chapter 7 bankruptcy consultation.

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