Frequently Asked Questions About Bankruptcy in NJ
Q: Will I lose everything I own if I discharge my debts in a Chapter 7?
Q: Will my credit report be permanently ruined?
Q: What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?
Q: Do I have to qualify to file a Chapter 7 bankruptcy?
Q: What debts cannot be discharged in a Chapter 7?
Q: What are my obligations when the petition is being prepared?
Q: Will I lose everything I own if I discharge my debts in a Chapter 7?
A: No. The bankruptcy laws provide exemptions for the value of property you may retain in a Chapter
7 proceeding. For a secured debt, such as a house or a car, the outstanding lien is subtracted from
the value of the property when determining value.
Q: Will my credit report be permanently ruined?
A: No. It is important to remember that if you continue making late payment or having items on your
credit report show as “in default” or “charged off”, your situation will not improve. By filing a
Chapter 7 bankruptcy, you will be showing that you are taking steps to resolve your problems and
moving forward, so that you can start rebuilding your credit score. Following your bankruptcy, you
will in all likelihood have adverse ramifications when obtaining new credit, such as a higher
interest rate or a lower limit, but if you pay on time, your credit score will eventually improve.
Q: What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?
A: A Chapter 7 bankruptcy allows you to permanently discharge certain unsecured debt, such as,
generally, medical bills, credit card obligations and unsecured personal loans, in exchange for the
sale of nonexempt assets, if any. In a Chapter 13 filing, a debtor works out a new payment
arrangement with creditors, agreeing to repay debts over a three to five year period, often for less
than the full amount owed.
Q: Do I have to qualify to file a Chapter 7 bankruptcy?
A: Yes. Under the 2005 bankruptcy law revision, you must undergo a “means test”, demonstrating that you lack the financial means to repay your creditors based on the amount of all income received in the six months prior to the month in which the bankruptcy petition is filed.
Q: What debts cannot be discharged in a Chapter 7?
A: Child or spousal support arrears, student loans and certain tax obligations are not eligible for
discharge.
Q: What are my obligations when the petition is being prepared?
A: Your attorney will provide you with a list of documentation which must be provided prior to your
petition being filed. The 2005 revision to the bankruptcy law imposes upon the attorney a duty of
diligence in gathering this documentation, and your matter will proceed smoothly and promptly if the
requested documentation is provided in a timely fashion.
You must be completely truthful with your attorney regarding your assets, liabilities, income and expenditures.
To arrange a meeting with an experienced New Jersey bankruptcy attorney, contact our office online or call us at 1-866-951-1948.
We are a debt relief agency. We provide legal assistance and help people file for bankruptcy relief under the bankruptcy code.
