Bankruptcy can be a great option for protecting important assets from creditors while discharging troublesome debts. However, there are requirements for filing that vary depending on the specifics of your case and which bankruptcy Chapter you file under.
In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act, which overhauled the bankruptcy code. Debtors are now required to pass the means test to file for Chapter 7 bankruptcy. However, you do not have to take the means test if your debts are primarily business debts.
If your household size and income are below the average in New Jersey, you pass the means test. If your income and household size are not below the average, the court requires an analysis of your disposable income and unsecured debt before determining whether you can file. Chapter 7 bankruptcy also has other requirements, so it is important to speak with a bankruptcy attorney if you are curious about pursuing this option.
Chapter 13 bankruptcy is an option if you did not qualify for Chapter 7. However, this option also has requirements. You must have some source of income that could pay back your creditors through a repayment plan. Your secured debts cannot exceed $1,184,200 and your unsecured debts cannot be greater than $394,725. You must be current on your income tax filings. Chapter 13 is also not an option for businesses. We encourage you to speak with one of our bankruptcy attorneys if you wish to pursue this option, as there are other requirements.
Chapter 11 bankruptcy is an option for businesses and individuals. In the latter case, the debtor’s finances are typically very complex, and it is the best option for the situation.
Should I Speak with a New Jersey Bankruptcy Lawyer?
Filing for bankruptcy (and qualifying for it) is a more complex process than most people realize. Picking the option that is best for your situation can also be difficult. You should speak with one of our New Jersey bankruptcy lawyers if you are considering bankruptcy. The New Jersey bankruptcy lawyers at Garland & Mason, L.L.C. could inform you of debt relief options that would best suit your situation.