New Jersey Bankruptcy Laws
Bankruptcy Follows Federal Guidelines
The majority of NJ bankruptcy law is dictated by the federal government’s Bankruptcy Reform Act of 1978, which is more commonly referred to simply as the Bankruptcy Code. Federal law dictates some integral pieces of NJ bankruptcy regulations. Some of these provisions require the following from debtors:
- All debtors filing for bankruptcy complete a ‘means test,’ which will indicate whether they are can discharge their debts in a Chapter 7 or must pay some of their debt in Chapter 13.
- The debtor must attend a creditor’s meeting, in which they will meet with their court-appointed trustee; the creditor’s NJ bankruptcy lawyer may be in attendance during this meeting. In a creditor’s meeting, the debtor will need to answer questions regarding their personal assets and liabilities
- All debtors must complete a mandatory financial education course and attend a credit counseling course either online, over the telephone or in person.
- Debtors must provide the courts with past tax returns and pay stubs as needed.
Federal bankruptcy law also mandates a powerful provision known as the automatic stay. Defined simply, the automatic stay means that when a debtor files for bankruptcy, all of their debts are frozen and creditors cannot take any steps to collect what is owed to them and must stop any and all lawsuits, garnishments and even harassing phone calls.
NJ Exemptions are Limited
The federal government has its own guidelines for which assets a debtor can keep after declaring bankruptcy; these assets are known as exemptions. Each state also has its own exemption regulations, and the Bankruptcy Code permits debtors to choose from the state bankruptcy exemption guidelines or federal bankruptcy exemption guidelines.
The NJ bankruptcy exemption regulations are drastically more restrictive than federal bankruptcy exemption regulations. Most notably, NJ exemptions offer very little protection to a debtor’s home, personal property, and material belongings. In just about every case, it is a better choice for debtors to opt for the federal exemptions.
Seek bankruptcy advice with a free phone consultation
Some areas of bankruptcy law are complicated and can be very confusing. With one of the South Jersey bankruptcy attorneys at McDowell Posternock Apell & Detrick, PC at your side, NJ and federal bankruptcy laws can be explained in the most understandable terms. Call us today or fill out our contact form to schedule a free phone consultation and understand the full scope of bankruptcy law and how it can benefit you.