Having a rudimentary understanding of what will happen during a Chapter 7 bankruptcy can help eliminate any hesitation or discomfort New Jersey residents may have with the process. Filing for bankruptcy can be unsettling enough, but not knowing how it works can make the process even more intimidating. Therefore, below is a broad outline of the Chapter 7 process.
Filing the petition initiates a New Jersey bankruptcy and activates the automatic stay requiring all collection activities to cease during the bankruptcy. However, much more information is required in order to provide the court and the trustee with a complete overview of the filer’s financial situation. Therefore, several “schedules” must be filed with the court, outlining the filer’s assets, liabilities and income. The trustee will also need to review tax returns, but they are not filed with the court.
The fees for a Chapter 7 bankruptcy may even be too much for a filer to afford in his or her current financial situation. A filer can request to pay the required fees in installments that are much more affordable. The total amount of fees, however, must be paid within 120 days of the petition’s filing date. In some cases, the court will extend that time to 180 days, but not without a request to do so. Further, some individuals may be entitled to file their bankruptcy free of charge if their income is at least 150 percent below the poverty level.
A hearing called the Meeting of Creditors will take place anywhere from 20 to 40 days after the petition is filed. At this meeting, the filer is placed under oath to answer questions regarding the information provided and whether the filer understands what the effects of a discharge will be. Creditors may also be present to ask questions as well, but the judge is never present in order to maintain his or her objectivity.
No later than 10 days after this meeting, the trustee will provide the court with a report. If certain documentation is absent or the filer fails to follow the rules outlined in the U.S. Bankruptcy Code or orders of the court, the bankruptcy can be dismissed without further consideration. Therefore, this article should not be relied upon to file a bankruptcy since it does not include all of the specifics or requirements necessary for a Chapter 7.
Source: FindLaw, “Chapter 7: How it Works“, , Aug. 25, 2014