The Process of a Chapter 7 in New Jersey
The debtor, meaning the individual filing, is required to provide his/her attorney with documentation regarding the value of all of their assets, a list of all creditors, income and expenses. Prior to being able to file, the NJ bankruptcy attorney must obtain the following documents from the debtor: pay stubs or printout of income and all deductions for the debtor and any additional household members. This must be for the time frame of six months prior to the filing date.
Additionally, the debtor must provide a detailed list of all assets, child support order(s), federal tax returns for the previous four years, a current copy of the debtor’s credit report and copies of all bills and notices. The debtor is required to go through credit counseling and provide a certificate of completion from an approved credit counselor. This certification must be provided to the court on the date of filing.
Credit Counseling
This is a law requirement that must be met prior to filing for bankruptcy. The debtor must complete credit counseling and submit a certificate of completion to the courts from an approved credit counseling agency. This is generally a quick and easy task to perform. There are presently a generous amount of court approved agencies to choose from of which can be located at: www.usdoj.gov/. Most of the agencies listed will charge a fee of $50.00 per person for the counseling and certificate.
This can be accomplished by contacting the agency via telephone or internet. Most agencies allow the course to be completed via telephone, internet or in person and will take approximately 1 and % of hours to finish. The intention of the counseling is to assist one in understanding their financial difficulties and make recommendations on how to make changes for the better of their situation. The counselor will request the following information in order to make a fair assessment on where the individual should be as far as debt to income ratio: income, expenses, assets and remaining creditors. The counselor will provide information on making better choices financially only, and there is no test required to obtain certification. The only requirement by the court is that you attend the counseling and obtain the certificate that reflects you have completed the counseling.
The bankruptcy petition is completed after the documents are provided to the courts. Once the petition is reviewed for accuracy, the debtor will sign and date the petition. At this point, the petition will be filed with the courts electronically. Notices of the filing will be generated by the court and distributed to all of the creditors listed on the petition. The court will then schedule a 341(a) Creditors Meeting/hearing, which is generally held approximately one month after the filing occurs.
First Hearing, 341(a) Creditors Meeting
The court will notify the debtor and all creditors of the hearing. The debtor and debtor’s attorney are required to attend the hearing. The creditors are also able to attend the hearing to ask the debtor(s) questions; it is highly unlikely that a creditor will appear at the hearing. The hearing is usually held in a room that is not a court room.
The following are required to be presented to the courts by the debtor at the time of the hearing: proof of identification, IE. Photo driver’s license and a social security card, proof of value of their home, and mortgage payoff. Proof of income and tax returns should be forwarded to the trustee prior to the hearing. In general, a hearing will usually last fifteen minutes. The trustee will ask the debtor questions to determine if the debtor is eligible for a discharge based on the requirements explained earlier in this document. The trustee will ask you questions about your assets to determine whether he/she can sell an asset for the benefit of any creditors. Also, the trustee will ask whether a debtor is able to pay back a portion of their debt.
Should the trustee believe that the debtor has met all of the requirements listed previously in this document and determine there is no further investigation required, he/she will recommend to the court that the debtor be granted an order of discharge.
Financial Management Course
Usually 45 days after the Creditors’ Meeting, the debtor(s) are required to complete a Personal Financial Management Course and provide the courts with a certificate of completion. This is very similar to the credit counseling requirement. The debtor must still use a court approved counseling agency which can be found on the same website that was provided to you earlier in this document. The course is allowed to be completed via internet, in person or by mail. This course will usually last between one and three hours depending on the agency chosen by the debtor. The intention of this course is to teach a debtor about money managing skills. Again, this course is only for informational purposes and does not require a test for a pass/fail.
Should the trustee recommend that the debtor be granted a discharge, it will be delivered to the debtor approximately 120 days after the filing of the petition.
In unlikely circumstances, the trustee will be allowed to delay the discharge process to conduct further investigation of certain assets to determine their value and sale worthiness. Keep in mind this is very unusual, however, should the trustee obtain court approval to sell an asset for the benefit of the creditors, he/she will notify the creditors of the information. Once this is completed, the trustee may sell the asset and distribute the proceeds in accordance of the bankruptcy laws. More so, in this circumstance, you will more than likely obtain your discharge prior to the sale of the asset. Please note, there are also various options available to you in order to avoid the unexpected sale of an asset.
If you want to discuss the debt problems you have and what options you have, call me at 866-503-5655. The consultation is free – and this New Jersey Bankruptcy Attorney will not pressure you or engage in any sales type conversation.