Welcome to Legal Help
Home New Jersey

Choose a State

New Jersey


New Jersey Bankruptcy

Chapter 7 Bankruptcy eliminates unsecured debt. Here are some
examples of unsecured debt that Chapter 7 may eliminate: most personal loans,
credit cards, medical bills and deficiencies on repossessed
vehicles.

Most times Chapter 7 Bankruptcy in the State of New
Jersey is the quickest, least expensive and easiest way to discharge debt. A
Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as
in Chapter 13. Instead, the bankruptcy Trustee gathers and sells the
debtor’s nonexempt assets and uses the proceeds from this sale of the non exempt
property to pay creditors in accordance with the provisions of the Bankruptcy
Code. In addition, the Bankruptcy Code will allow the debtor to keep certain
“exempt” property; but a Trustee will liquidate the debtor’s remaining assets.
Accordingly, potential debtors should realize that the filing of a petition
under Chapter 7 may result in the loss of property and therefore potential
debtors, prior to filing for bankruptcy, should seek the advice of Bankruptcy
Counsel in New Jersey.
When a Chapter 7 petition is filed, the U.S. Trustee’s Office appoints an
interim Trustee to administer the case and if need be, liquidate the debtor’s
nonexempt assets. If all the debtor’s assets are exempt or subject to valid
liens, the Trustee will normally file a “no asset” report with the court, and
there will be no distribution to unsecured creditors. This is typically the way
most Chapter 7 cases in New Jersey are resolved. But if the case appears to be
an “asset” case at the outset, than the Trustee sends out a proof of claim to
all the creditors in the case and these creditors must file their claims with
the court within 90 days after the first date set for the meeting of creditors.

A governmental unit, such as IRS or Labor Department, however, has 180 days from
the date the case is filed to file a proof claim. In the typical no asset
Chapter 7 case, there is no need for creditors to file proofs of claim because
there will be no distribution. The primary role of a Chapter 7 Trustee, in an
asset case, is to liquidate the debtor’s nonexempt assets in a manner that

Free Bankruptcy Evaluation

Bankruptcy Videos