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Understanding the Chapter 7 bankruptcy process

Once a New Jersey resident has decided to file for bankruptcy, it will be helpful to understand how the process works. A Chapter 7 is a liquidation, which means that the trustee could sell any non-exempt assets in order to pay creditors. In many cases, all of a filer's property falls under an exemption, and qualifying debts are discharged.

Before that, however, a potential filer will need to undergo a means test to verify that he or she qualifies for a Chapter 7. While information regarding all debts, including lawsuits, garnishments or other legal actions, is gathered, a credit counseling course will need to be completed before the petition can be filed. After the petition is filed, another course will need to be completed before a discharge can be issued. It should be noted that certain debts are not generally subject to discharge, such as student loans, taxes and child support, among others.

Prior to a discharge being issued by the court, the filer will be required to attend what is called a 341 meeting. The filer, the trustee and any creditors who wish to do so attend this meeting. In the majority of cases, creditors do not attend, but if they do, they are able to ask questions. More often, it is the trustee asking the questions. If the trustee does not require anything further, a discharge could be issued in approximately 60 days.

This might seem like an easy process, but it can quickly become complex and frustrating. Filing for Chapter 7 bankruptcy can provide a New Jersey resident with the clean slate needed in order to start fresh financially. However, a misstep or missed deadline could result in a dismissal of the case. Therefore, it is generally beneficial to have an attorney to assist with the process.

Source:, "11 Steps to Take When Bankruptcy Is Your Only Option", Andrea Cannon, March 11, 2016

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