When faced with mounting debt and financial challenges, it’s essential to have accurate information about the frequency of bankruptcy filings. This knowledge allows individuals to make informed decisions about their financial future and explore the best course of action to address their debt burdens.
If you find yourself considering bankruptcy as a solution to your financial difficulties, it is highly recommended to seek the help of a skilled New Jersey bankruptcy attorney. They possess the knowledge of the law and experience necessary to guide you through the intricate bankruptcy process, ensuring that you understand the laws and regulations specific to New Jersey.
Our qualified New Jersey bankruptcy attorneys at Straffi and Straffi Attorneys At Law can assess your unique situation, help you determine if bankruptcy is the right option for you, and provide guidance on the frequency of bankruptcy filings. Our attorneys can help you navigate the complexities of the legal system on your behalf, maximizing the benefits of bankruptcy while minimizing potential drawbacks. We can also assist you in understanding how bankruptcy can affect ownership of your assets such as how filing for bankruptcy can affect your home equity. Contact us today at (732) 341-3800 to schedule a free consultation with one of our attorneys.
What is Bankruptcy?
Bankruptcy is a legal status that can be declared by individuals or businesses who are unable to repay their debts. It provides a fresh start by eliminating certain debts or establishing a manageable repayment plan. Filing for bankruptcy can help debtors protect themselves from aggressive collection actions, such as wage garnishment, foreclosure, or repossession.
Bankruptcy laws in New Jersey encompass both federal regulations and specific state provisions. It’s essential to understand these laws before filing for bankruptcy:
- Exemptions: New Jersey has its own set of exemptions that determine which assets you can protect from liquidation during bankruptcy. These exemptions include homestead, personal property, motor vehicles, retirement accounts, and more. Consulting with a knowledgeable bankruptcy attorney in New Jersey can help you understand the specific exemptions applicable to your situation.
- Means Test: As mentioned earlier, the means test is a crucial aspect of Chapter 7 bankruptcy eligibility in New Jersey. It compares your average monthly income to the state’s median income to assess whether you have enough disposable income to repay your debts. An experienced bankruptcy attorney can guide you through this process and determine if you qualify for Chapter 7 bankruptcy. In New Jersey, the annual income limit for a one-person household is $83,898 for cases filed after March 15, 2023.
- Automatic Stay: Upon filing for bankruptcy in New Jersey, an automatic stay goes into effect. This stay prohibits creditors from pursuing collection actions against you, such as lawsuits, wage garnishments, or phone calls demanding payment. The automatic stay provides temporary relief and allows debtors to work through the bankruptcy process. However, it is important to note that not all debt can be discharged with a bankruptcy filing and you should carefully consider the type of debt that you have before filing your application.
- Bankruptcy Exemptions: New Jersey allows individuals filing for bankruptcy to choose between federal bankruptcy exemptions and state exemptions. However, it’s important to note that you cannot mix and match exemptions from both systems. An experienced bankruptcy attorney can advise you on the best approach based on your specific circumstances.
If you are considering filing for bankruptcy, consulting with a knowledgeable bankruptcy attorney in New Jersey will ensure that you make informed decisions and comply with the applicable laws and regulations.
Different Types of Bankruptcy in New Jersey
In New Jersey, the two primary types of bankruptcy for individuals are Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” involves the liquidation of non-exempt assets to repay creditors. The bankruptcy court appoints a trustee who evaluates your assets, sells the non-exempt ones, and distributes the proceeds among your creditors. Many assets are protected by exemptions, allowing debtors to retain essential property necessary for a fresh start. However, eligibility criteria for Chapter 7 bankruptcy may be difficult to meet. It is important to consult a skilled attorney to determine the advantages and disadvantages of each set and to choose the one that benefits you the most.
Eligibility Criteria for Chapter 7 Bankruptcy in New Jersey
To be eligible for Chapter 7 bankruptcy in New Jersey, debtors must meet certain criteria, including:
- Means Test: Debtors must pass the means test, which compares their income to the state’s median income. If your income falls below the median, you automatically qualify. If your income exceeds the median, further calculations are performed to determine eligibility. These calculations are based on the number of earners (people who have income) in a person’s household. For a one-earner household in New Jersey, the median income is $83,898 as of April 1, 2023.
- Credit Counseling: Debtors must complete a credit counseling course from an approved agency within 180 days before filing for Chapter 7 bankruptcy. The certificate of completion must be submitted to the bankruptcy court.
- Prior Bankruptcy Discharge: If you previously received a Chapter 7 discharge, you must wait eight years from the date of the previous filing before you can file for Chapter 7 bankruptcy again and receive another discharge.
Benefits and Drawbacks of Filing Chapter 7 Bankruptcy Multiple Times
While Chapter 7 bankruptcy provides individuals with significant debt relief, filing for Chapter 7 bankruptcy multiple times in New Jersey has both benefits and drawbacks:
- Fresh Start: Filing for Chapter 7 bankruptcy can provide a fresh start by eliminating most of your unsecured debts, such as credit card debt, medical bills, and personal loans.
- Automatic Stay: Upon filing for Chapter 7 bankruptcy, an automatic stay goes into effect, providing immediate relief from creditor actions, such as lawsuits, wage garnishments, and collection calls.
- Liquidation: Due to the type of bankruptcy, all assets that are considered non-exempt would be sold off to repay your debt. Which assets become exempt from liquidation is determined by the set of exemptions you choose. Consult a skilled attorney to determine how to best protect your assets when filing for bankruptcy.
- Impact on Credit: Filing for Chapter 7 bankruptcy can have a negative impact on your credit score and remain on your credit report for up to ten years. Multiple filings can further affect your creditworthiness.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often referred to as “reorganization bankruptcy,” allows debtors to create a repayment plan to gradually repay their debts over a period of three to five years. This type of bankruptcy is suitable for individuals who have a regular income and want to protect their assets from liquidation.
Eligibility Criteria for Chapter 13 Bankruptcy in New Jersey
To be eligible for Chapter 13 bankruptcy in New Jersey, individuals must meet certain criteria, including:
- Regular Income: Debtors must have a regular source of income to demonstrate their ability to make the proposed repayment plan payments.
- Debt Limitations: There are limits on the amount of debt an individual can have to qualify for Chapter 13 bankruptcy. As of June 2022, the combined unsecured and secured debt limit is $2.75 million. It’s important to consult with a bankruptcy attorney to stay updated on the current limits.
Benefits and Drawbacks of Filing Chapter 13 Bankruptcy Multiple Times
Filing for Chapter 13 bankruptcy multiple times in New Jersey has both benefits and drawbacks:
- Debt Repayment: Chapter 13 bankruptcy allows individuals to repay their debts through a structured repayment plan, giving them an opportunity to regain control of their finances and avoid liquidation of assets.
- Asset Protection: Chapter 13 bankruptcy allows individuals to keep their assets while repaying their debts, as long as they adhere to the terms of the court-approved repayment plan.
- Time Restrictions: As mentioned earlier, there are time restrictions between Chapter 13 filings, requiring a waiting period of two years from the date of the previous filing before filing again for Chapter 13 bankruptcy in New Jersey.
- Credit Impact: Filing for Chapter 13 bankruptcy can have a negative impact on your credit score, and the bankruptcy filing will remain on your credit report for up to seven years. Multiple filings can further affect your creditworthiness.
The Frequency of Bankruptcy Filings in New Jersey
Filing for bankruptcy is a significant decision that can have long-lasting implications on your financial well-being. Understanding the frequency of bankruptcy filings in New Jersey is crucial to navigate the process effectively and make informed decisions.
How often can you file for bankruptcy in New Jersey?
The frequency with which you can file for bankruptcy in New Jersey depends on the type of bankruptcy previously filed and the specific chapter under which you seek relief.
Chapter 7 to Chapter 7
If you previously filed for Chapter 7 bankruptcy and received a discharge, you must wait eight years from the date of the previous filing before you can file for Chapter 7 bankruptcy again and receive another discharge. However, it’s important to note that even if you are not eligible for a discharge, you may still benefit from filing Chapter 7 bankruptcy to address certain financial issues.
Chapter 7 to Chapter 13
If you have received a Chapter 7 discharge, you can file for a Chapter 13 bankruptcy after four years from the date of the previous filing.
Chapter 13 to Chapter 7
If you filed for Chapter 13 bankruptcy and received a discharge, you can file for Chapter 7 bankruptcy six years after the date of the previous filing.
Chapter 13 to Chapter 13
If you received a Chapter 13 discharge, you must wait two years from the date of the previous filing before you can file for Chapter 13 bankruptcy again. You may also opt to file another Chapter 13 bankruptcy after the repayment plan for your previous filing has been successfully concluded, taking approximately 3-5 years.
Knowing about the limitations of how often you can file for bankruptcy is important as it allows you to avoid any issues with restrictions and avail of the benefits for filing in a timely manner. It is recommended to consult with an experienced bankruptcy attorney who can assess your unique circumstances, guide you through the process, and provide the most appropriate solutions based on the applicable laws and regulations.
Chapter 7 and Chapter 13 Bankruptcy Filing Denial
Both Chapter 7 and Chapter 13 bankruptcy filings may be denied for discharge under certain circumstances. Here’s a brief overview of situations where discharge can be denied in each chapter:
Chapter 7 Bankruptcy:
- Fraudulent Activities: If the debtor engaged in fraudulent activities, such as concealing assets, providing false information, or committing perjury during the bankruptcy process, the court may deny discharge.
- Prior Bankruptcy Discharge: If the debtor previously received a Chapter 7 discharge within the past eight years or a Chapter 13 bankruptcy in the past six years, they are not eligible for another discharge in Chapter 7 bankruptcy.
- Failure to Complete Required Courses: Debtors are required to complete credit counseling and financial management courses as part of the bankruptcy process. Failure to comply with these requirements may result in discharge being denied.
Chapter 13 Bankruptcy:
- Failure to Comply with Repayment Plan: In Chapter 13 bankruptcy, debtors must adhere to the court-approved repayment plan and make timely payments to creditors. If a debtor fails to meet these obligations without valid reasons, the court may deny discharge.
- Failure to Disclose Income or Assets: If the debtor fails to disclose all sources of income or assets in their bankruptcy filings, it can lead to denial of discharge.
- Ineligible Debts: Certain types of debts, such as certain tax debts or debts arising from fraudulent activities, may not be eligible for discharge in Chapter 13 bankruptcy. If a debtor’s filing includes such debts, they may be denied discharge for those specific obligations.
It’s important to note that the specific circumstances surrounding a bankruptcy case can vary, and the court’s decision regarding discharge denial is based on individual factors and the interpretation of bankruptcy laws. Consulting with an experienced bankruptcy attorney is crucial to navigate the bankruptcy process and ensure compliance with the requirements to avoid discharge denial.
The Consequences of Frequent Bankruptcy Filings
Filing for bankruptcy can provide much-needed debt relief but frequent bankruptcy filings in New Jersey can have lasting consequences on various aspects of your financial life. Understanding these consequences is crucial when considering the option of multiple bankruptcy filings.
Impact of Frequent Bankruptcy Filings on Credit Scores
Frequent bankruptcy filings can have a significant impact on your credit scores. Each bankruptcy filing will appear on your credit report, which can lower your credit score. These negative marks can make it challenging to obtain credit in the future and may result in higher interest rates on loans or credit cards.
Availability of Credit After Multiple Bankruptcy Filings
After multiple bankruptcy filings in New Jersey, obtaining credit may become more difficult. Lenders may view frequent bankruptcy filings as a risk factor and may be hesitant to extend credit. If you are approved for credit, it is likely to come with higher interest rates and stricter terms. Rebuilding credit after multiple bankruptcies can be a gradual process that requires patience and responsible financial management.
Long-Term Effects on Financial Reputation and Employment Prospects
Frequent bankruptcy filings can have long-term effects on your financial reputation and employment prospects. Some employers may conduct credit checks as part of the hiring process, and a history of multiple bankruptcies could negatively impact your chances of securing certain job positions, particularly those involving financial responsibilities or sensitive information.
Additionally, landlords and potential lenders may consider your bankruptcy history when evaluating your trustworthiness as a tenant or borrower. It is essential to be aware of these potential consequences and develop a strategy to address them proactively.
|Impact of Frequent Bankruptcy Filings||Description|
|Lowered Credit Scores||Each bankruptcy filing appears on your credit report, lowering your credit score.|
|Difficulty Obtaining Credit||Lenders may view frequent bankruptcy filings as a risk factor, making it challenging to obtain credit.|
|Higher Interest Rates and Stricter Terms||If approved for credit, it is likely to come with higher interest rates and stricter terms.|
|Impaired Financial Reputation||Multiple bankruptcies can negatively impact your financial reputation, potentially affecting employment prospects and trustworthiness evaluations by landlords and lenders.|
|Limited Job Opportunities||Some employers conduct credit checks during the hiring process, and multiple bankruptcies can decrease your chances of securing job positions, especially those involving financial responsibilities.|
|Potential Tenant and Borrower Trustworthiness||Landlords and lenders may consider your bankruptcy history when evaluating your trustworthiness as a tenant or borrower.|
Strategies for Rebuilding Credit and Regaining Financial Stability
While frequent bankruptcy filings can present challenges, it is possible to rebuild credit and regain financial stability over time. Here are some strategies to consider:
- Develop a Budget: Create a realistic budget to manage your income and expenses effectively. Stick to the budget and prioritize essential expenses to avoid accumulating new debt.
- Establish an Emergency Fund: Build an emergency fund to handle unexpected expenses without resorting to credit. Having a financial cushion can help prevent future financial difficulties.
- Obtain a Secured Credit Card: Consider obtaining a secured credit card that requires a cash deposit as collateral. Responsible use and timely payments can help rebuild your credit history.
- Make Timely Payments: Pay all your bills on time, including credit card bills, loans, and utilities. Consistent, timely payments demonstrate your creditworthiness and improve your credit standing.
- Seek Credit Counseling: Work with a reputable credit counseling agency that can provide guidance on managing debt, budgeting, and rebuilding credit. Their experience can help you develop a personalized plan for financial recovery.
- Monitor Your Credit: Regularly review your credit reports from the major credit bureaus to ensure accuracy and identify any potential errors or discrepancies. Promptly address any issues that may arise.
Rebuilding credit and regaining financial stability after frequent bankruptcy filings in New Jersey is a gradual process that requires discipline and commitment. Adopting responsible financial habits and seeking professional guidance can help you take positive steps toward rebuilding your credit and achieving long-term financial well-being.
Working with a Top-Rated New Jersey Bankruptcy Lawyer
If you are facing overwhelming debt or considering bankruptcy as a solution, it’s important to take proactive steps to address your financial challenges. Start by seeking the help of a skilled New Jersey bankruptcy attorney who can provide personalized guidance tailored to your specific needs. They can help you navigate the bankruptcy process, explore alternative debt solutions, and ensure you understand the laws and regulations specific to New Jersey.
Furthermore, rebuilding credit is an essential aspect of recovering from financial difficulties. Work on developing responsible financial habits, making timely payments, and seeking guidance from credit counseling agencies. By taking these actions, you can rebuild your creditworthiness and regain control over your financial future.
Remember, you don’t have to face your financial challenges alone. Partner with a trusted New Jersey bankruptcy attorney from Straffi & Straffi Attorneys at Law who can offer the support and experience needed to navigate the complexities of bankruptcy or explore alternative debt relief options. By taking the necessary steps, you can regain your financial stability and move toward a brighter future. Don’t wait—seek professional assistance and start your journey toward a fresh financial start today. Contact us today at (732) 341-3800 to schedule a free consultation.