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  • Writer's pictureBrian M. Miranda, Esq.

Time for a Restart?

If you have a large amount of unsecured debt that you are unable to pay off – medical bills, personal loans, or credit card debt – you may want to consider filing for Chapter 7 bankruptcy. This provision allows the debtor to discharge their debts via a trustee – a person assigned by a bankruptcy court to oversee their assets – who distributes the proceeds of sold assets to their creditors. In the state of New Jersey, there are certain assets that are exempt, i.e. they cannot be sold by the trustee to discharge your debts.

Some examples of exempt assets in New Jersey are pensions for most public sector employees, unemployment insurance, and workers compensation. The vast majority of people who file Chapter 7 do not lose their home in the process. It is important to note there are certain debts that cannot be discharged, such as alimony, child support, fraudulent debts, certain taxes, and student loans.

Every state requires that a debtor filing a Chapter 7 bankruptcy pass a “means test,” an investigation into your personal finances conducted by the state government, to qualify. Essentially, you must prove that you are unable to pay off your debts. In New Jersey, your household income must fall below the median income of a similar-sized household in order to qualify. If you are above the household median income for New Jersey, you will have to proceed to the second part of the means test, which examines your personal finances more closely.

If you are thinking about filing for a Chapter 7 bankruptcy in the state of New Jersey, or want to know what your options are, contact us at 908-424-1011, or message us on our Facebook or Instagram.

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