Postend on March 12, 2024

What is an Emergency Bankruptcy Filing in New Jersey?

An emergency bankruptcy filing allows a debtor to quickly file a minimum amount of paperwork with the court to initiate the bankruptcy process. The debtor must then later supplement their filing with additional documentation within a set period, usually 14 days. This process significantly speeds up the time it takes to get a case filed, meaning that the debtor receives the protection of the automatic stay sooner.

Filing for bankruptcy can be a very challenging and stressful experience for anyone, which is why it’s crucial for those considering it to have a knowledgeable legal representative to navigate them through the process. At Straffi & Straffi Attorneys at Law, Daniel Straffi Jr., a bankruptcy lawyer, and his team of seasoned New Jersey emergency bankruptcy attorneys can assist individuals in filing for debt relief under the Bankruptcy Code in New Jersey. If you’re struggling with debt, our legal advice and representation may be able to help. We can also guide you through what filing a bankruptcy can entail, such as whether a bankruptcy can show on background checks. Our team is dedicated to assisting people in achieving financial independence and starting anew. To schedule a consultation, call us today at (732) 341-3800.

An emergency bankruptcy filing typically includes a few basic forms, such as: 

  • Voluntary Petition for Individuals Filing for Bankruptcy (Form 101) 
  • A list of creditors holding the 20 largest unsecured claims and their contact information
  • A certificate of credit counseling
  • Form 121

Once the paperwork has been filed, the debtor will receive an immediate automatic stay, which prevents creditors from any further collection efforts. The debtor then typically has two weeks to submit the rest of their required documentation to the court.

Reasons for Filing an Emergency Bankruptcy

There are various reasons why a debtor may choose to file for emergency bankruptcy. Some of the most common reasons include:

  • Imminent Foreclosure: If a debtor is facing the imminent loss of their home due to foreclosure, they may choose to file an emergency bankruptcy to stop the foreclosure process and possibly save their home.
  • Wage Garnishment: Wage garnishments can cause significant financial hardship for a debtor. If a wage garnishment is about to begin or is already in place, filing an emergency bankruptcy can stop the garnishment and provide immediate relief.
  • Bank Levy: Similar to wage garnishment, a bank levy can cause serious financial strain on a debtor. Filing an emergency bankruptcy can prevent a bank from seizing funds from a debtor’s account or freezing the account.
  • Eviction: An emergency bankruptcy filing may provide a temporary halt to eviction proceedings, allowing the debtor more time to negotiate with their landlord or find alternate housing.
  • Lawsuits: If a creditor has filed a lawsuit against a debtor, an emergency bankruptcy filing can stop the lawsuit and provide the debtor with relief.

Most individuals filing for bankruptcy want to utilize the automatic stay filing bankruptcy would give. To make sure that your filing is accurate and would not be dismissed by the court, seeking legal help is essential.

Emergency Bankruptcy Filing to Stop Foreclosure

In the face of imminent foreclosure, homeowners in New Jersey may find a lifeline in an emergency bankruptcy filing. This legal maneuver is strictly a last-ditch effort, designed to halt the foreclosure process in its tracks. When a debtor files an emergency bankruptcy petition, often referred to as a “skeleton” or “bare-bones” filing, it triggers an automatic stay. This stay is a powerful legal injunction that stops creditors, including lenders, from proceeding with foreclosure and other collection activities.

The process begins with submitting a minimal set of documents to the court. The debtor then has 14 days to complete and file the remaining necessary paperwork. This stopgap gives homeowners the breathing room needed to organize their financial affairs and decide on their next steps.

Lenders are required by law to provide homeowners with a notice of default and a statutory period before they can set a foreclosure sale date. It’s crucial for homeowners to scrutinize this notice for the scheduled sale date. The timing of the bankruptcy filing is pivotal — if submitted before the sale of the home, the automatic stay can delay or even stop the foreclosure entirely. However, if the lender has already sold the property, bankruptcy will not revert ownership back to the debtor.

Given the complexities and the high stakes involved, it’s advisable to consult with an emergency bankruptcy attorney who can guide you through this urgent process and help you avoid potential pitfalls. An emergency bankruptcy filing can be a powerful tool to prevent the loss of your home, but it must be handled with precision and care.

Benefits of an Emergency Bankruptcy Filing

The primary benefit of an emergency bankruptcy filing is the immediate protection it affords the debtor under the automatic stay. By filing an emergency bankruptcy, a debtor can stop foreclosure proceedings, eviction, wage garnishments, and lawsuits in their tracks.

Other benefits of an emergency bankruptcy filing include:

  • Time: Emergency bankruptcy filings allow the debtor to begin the bankruptcy process quickly, providing the debtor with the needed protection from their creditors.
  • Stress Relief: By stopping collection efforts and providing the debtor with a structured plan to repay their debts, an emergency bankruptcy filing can provide significant stress relief for the debtor.
  • Asset Protection: By initiating the bankruptcy process, the debtor can protect their assets from creditors, giving them the opportunity to reorganize and discharge some of their debts.
  • Rebuilding Credit: While filing for bankruptcy can have a negative impact on a debtor’s credit score, it can also provide a fresh financial start, allowing the debtor to rebuild their credit over time.

It is important to note that filing for emergency bankruptcy is not always the best option for every debtor. It is crucial to consult with an experienced bankruptcy attorney and carefully consider all options and potential consequences before filing for bankruptcy, whether it is an emergency filing or not.

Benefit Description
Immediate Protection Emergency bankruptcy filing provides immediate protection under the automatic stay, stopping foreclosure, eviction, wage garnishments, and lawsuits.
Quick Start Allows debtors to begin the bankruptcy process rapidly, offering needed protection from creditors.
Stress Relief Halts collection efforts and provides a structured debt repayment plan, relieving significant stress for the debtor.
Asset Protection Initiating bankruptcy helps protect the debtor’s assets from creditors, allowing for reorganization and debt discharge.
Rebuilding Credit Although it may impact credit negatively, bankruptcy offers a fresh start to rebuild credit over time.

What is a Skeleton Bankruptcy Filing?

A Skeleton Bankruptcy Filing, also referred to as an emergency bankruptcy filing, is a legal procedure that allows individuals to quickly file for bankruptcy in pressing situations. This expedited filing is particularly crucial for those facing immediate financial threats like vehicle repossession, eviction, foreclosure, wage garnishments, or bank levies.

The primary advantage of a skeleton filing is the immediate enactment of an automatic stay. This court-ordered injunction stops most creditors in their tracks, preventing them from continuing with collection efforts, providing debtors with immediate protection.

When you file a traditional bankruptcy petition, you’re typically submitting a comprehensive document that can be more than 50 pages long. However, a skeleton bankruptcy filing is much more abbreviated, requiring only the essential forms to trigger the automatic stay. This brevity allows for a faster response to financial emergencies.

The ease of initial filing doesn’t mean the process is over with the submission of the skeletal petition. Debtors are given a strict deadline of 14 days from the initial filing to provide the remaining detailed documentation required to complete the bankruptcy process. This follow-up documentation must include accurate financial statements and schedules.

It’s imperative to understand that any inaccuracy in these follow-up documents can lead to the dismissal of the bankruptcy case. Moreover, providing false information can have severe legal repercussions, including criminal charges. Therefore, while a skeleton bankruptcy filing offers a swift shield against immediate financial distress, it is just the first step in a process that demands thorough and accurate completion within a short timeframe.

Procedures for Filing an Emergency Bankruptcy in New Jersey

Filing an emergency bankruptcy in New Jersey gives you immediate relief from creditors and stops them from taking any legal action against you. This form of bankruptcy is considered a “skeleton” filing, as it allows you to submit the minimum amount of paperwork necessary to initiate the bankruptcy process. However, it is important to note that the debtor must later supplement their emergency filing with additional documentation within a set period, usually 14 days.  Following are the procedures you need to follow for filing an emergency bankruptcy in New Jersey:

Preparation of Required Forms and Documentation

Before filing an emergency bankruptcy, it’s vital to understand what forms and documentation will be needed. The main documentation is the Voluntary Petition for Individuals or Businesses, which is also known as Form B101 or B201 depending on the type of bankruptcy you’re filing for. Some other forms that are usually needed include:

  • Summary of Assets and Liabilities (Form B106)
  • Schedules A to J, which details your assets, liabilities, income, expenses, and other financial information
  • Statement of Financial Affairs (Form B107)

It is advised to work with a bankruptcy attorney if possible, as they can help you navigate the process and ensure you provide the right information. Keep in mind that you’ll need to gather relevant documents that support your bankruptcy filing, such as income statements, property documentation, and creditor correspondence.

Submission of Minimum Documents

Since time-sensitive situations necessitate the filing of emergency bankruptcy, you can initially submit the minimum required documents. At the very least, you’ll need to file the Voluntary Petition form, Form 121, and a Mailing Matrix (list of creditors). After submitting these minimum documents, you’ll get an automatic stay, which stops creditors from taking further collection actions against you.

You must file the remaining required documents within 14 days of your emergency filing, or else your bankruptcy case may be dismissed. Not submitting the complete set of documents could result in your case being dismissed without a discharge, making you ineligible for automatic stays in future cases for 180 days.

Filing Fee and Installment Payment Plans

When filing for emergency bankruptcy, you must pay the applicable filing fee. The fee varies depending on the type of bankruptcy (Chapter 7, 11, 12, or 13) but can be as high as $338 for a Chapter 7 bankruptcy.

If you cannot afford the full fee upfront, New Jersey allows you to apply for an installment payment plan by submitting Form B103A. This form outlines your proposed payment plan, which must be reviewed and approved by the bankruptcy court. Keep in mind that failing to make the agreed-upon payments could result in your case being dismissed.

Automatic Stay and its Implications

When you file an emergency bankruptcy in New Jersey, you’re granted an automatic stay – a court mandate that prevents creditors from attempting to collect on your debts. The stay offers relief in several ways, such as:

  • Stopping wage garnishments or bank account levies
  • Halting foreclosure proceedings temporarily
  • Preventing repossession of a vehicle
  • Blocking the disconnection of utilities

Remember that automatic stays are temporary, and creditors can request the court to lift the stay in particular cases. Thus, it’s crucial to complete your bankruptcy filing (submitting all required forms and documentation) within 14 days of your emergency filing.

In summary, filing an emergency bankruptcy in New Jersey offers immediate protection from creditors, granting you time to gather essential documentation and complete the bankruptcy process. Be sure to work with an attorney if possible, as they can help you navigate the complex procedures and ensure a smooth process.

Additional Documents and Completion of Filing

The filing of a bankruptcy petition is only the beginning of the process. After your bankruptcy petition has been submitted to the court, you will need to complete several other tasks to ensure a successful bankruptcy outcome. Some essential steps to be taken after filing include submitting remaining documents, attending the creditors’ meeting, and fulfilling credit counseling and debtor education requirements.

It is imperative to adhere to the timelines and requirements set by the court and bankruptcy laws. Debtors should stay organized, communicate with their lawyers, and follow the court’s instructions to ensure a successful and timely resolution to their bankruptcy case.

Submitting Remaining Documents within 14 days

After filing the bankruptcy petition, debtors are required to submit additional supporting documents within 14 days. Some of these documents include:

  • Pay stubs, bank statements, or other proof of income for the 60 days prior to filing, so the court can determine if the debtor qualifies for Chapter 7 or Chapter 13 bankruptcy.
  • A detailed list of the debtor’s assets, including real property, personal property, and other assets. This helps the court and trustee evaluate the debtor’s financial situation.
  • A statement of financial affairs, which includes a summary of income, expenses, and other financial transactions.

Submitting these documents on time allows the court and the bankruptcy trustee to make an informed decision about the debtor’s financial situation and, ultimately, the viability of the bankruptcy case. Failing to submit supplementary documents or meet other deadlines set by the court can lead to severe consequences. If the debtor does not file the required documents within 14 days, the court may dismiss the case, which would eliminate the bankruptcy protection provided under the law.

Attending the Creditors’ Meeting (341 Meeting)

Approximately 21 to 40 days after filing for bankruptcy, a meeting with the bankruptcy trustee and creditors, also known as the 341 meeting of creditors’ meeting, will be scheduled. This meeting enables the trustee to question the debtor about their financial situation and the information disclosed in the bankruptcy petition and documents.

Debtors are required to attend this meeting and answer questions under oath. Creditors may also be present and ask questions about the debtor’s financial affairs. Although the meeting is generally short and formal, it is a critical part of the bankruptcy process.

Debtors should ensure that they are well-prepared for the meeting, bringing along all necessary documents such as identification, tax returns, and other financial records. Moreover, if a debtor does not attend the creditors’ meeting or fails to complete credit counseling and debtor education requirements, their bankruptcy case may also be dismissed, or the discharge of their debts could be denied.

Fulfilling Credit Counseling and Debtor Education Requirements

Before filing for bankruptcy, debtors must complete credit counseling from an approved agency. The counseling should help debtors understand their financial situation and explore alternatives to bankruptcy.

Similarly, after filing for bankruptcy, debtors must complete a debtor education course before they can receive a discharge of their debts. The course aims to help debtors understand the consequences of bankruptcy and learn personal financial management skills.

Both credit counseling and debtor education are crucial components of the bankruptcy process, ensuring that debtors are well-informed and better prepared to manage their finances after bankruptcy.

Types of Bankruptcy and Eligibility for an Emergency Filing

Bankruptcy is a legal process that enables an individual or a business entity to get relief from their existing debts that they cannot pay. During this process, the debtor’s assets and liabilities are evaluated by a bankruptcy court, and it may decide to either discharge some or all of the debts or reorganize them into a manageable repayment plan. When faced with an urgent financial crisis, one may opt for an emergency filing to provide immediate protection from creditors. Here are the types of bankruptcy and eligibility requirements for the emergency filing of Chapter 7 and Chapter 13 bankruptcy cases:

Chapter 7 Bankruptcy and Emergency Filing

Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows a debtor to discharge most of their unsecured debts after selling (or liquidating) their non-exempt assets to repay their creditors. It primarily aims to give the debtor a fresh financial start by providing them with a clean slate.

During an emergency filing, also known as a “skeleton petition,” the debtor can expedite the process by filing only the minimum required documents, which typically include Form 101 (the bankruptcy petition) and Form 121 (the social security number statement). After filing a skeleton petition, the debtor receives the protection of the automatic stay, which temporarily stops all collection efforts by the creditors, giving the debtor some breathing room.

The eligibility requirements for the emergency filing of Chapter 7 bankruptcy include: 

  • Passing the means test: The mean test determines the debtor’s financial capability to pay their debts based on their income, expenses, and family size. If a debtor’s income is below the median income in their state, they may qualify for Chapter 7 bankruptcy. 
  • Credit counseling: The debtor must undergo credit counseling within 180 days before filing for bankruptcy to understand their financial condition, and alternatives to bankruptcy, and create a budget plan.

Chapter 13 Bankruptcy and Emergency Filing

Chapter 13 bankruptcy, also known as reorganization bankruptcy, involves creating a repayment plan that allows the debtor to repay a part or all of their existing debts over three to five years while keeping their assets. This type of bankruptcy is ideal for individuals with regular income and assets they want to protect, such as a home or a car.

Similar to Chapter 7, an emergency filing for Chapter 13 bankruptcy involves submitting the minimum documents required to initiate the case, which provides immediate protection under the automatic stay.

The eligibility requirements for the emergency filing of Chapter 13 bankruptcy include: 

  • Financial capability: The debtor needs to have a regular source of income to prove their ability to meet the repayment plan requirements. 
  • Unsecured and secured debt limits: As of 2022, both secured and unsecured debts of the debtor should not exceed $2.75 million. 
  • Tax return filings: Debtors must provide proof that they have filed income tax returns for the past four years before filing for bankruptcy.

Determining the correct type of bankruptcy is essential as well as adhering to the eligibility requirements to ensure that your case is admitted by the court and properly evaluated. 

Eligibility Criteria for Each Type of Bankruptcy

Several factors determine the eligibility of a debtor for filing either Chapter 7 or Chapter 13 bankruptcy. These factors include:

  • Income level: As mentioned earlier, a debtor’s income level determines whether they qualify for Chapter 7 or Chapter 13 bankruptcy. Due to the existence of the means test for Chapter 7, Chapter 13 may be a more viable option for those with higher income levels.
  • Disposable income: The amount of disposable income influences the type of bankruptcy filing. A debtor with low disposable income is more likely to qualify for Chapter 7 bankruptcy.
  • Assets: Chapter 7 bankruptcy involves liquidating the debtor’s non-exempt assets to repay creditors, while Chapter 13 bankruptcy allows the debtor to retain their assets and repay debts over time. If a debtor wants to keep their assets, Chapter 13 bankruptcy may be more suitable.

Before pursuing an emergency bankruptcy filing, it is crucial to consult with a qualified attorney who can guide you through the legal process and help you determine which type of bankruptcy is most suitable for your situation.

Possible Complications and Risks of Emergency Bankruptcy Filings

Filing for emergency bankruptcy, also known as a “bare-bones” or “skeletal” bankruptcy petition, can provide immediate relief to individuals experiencing financial difficulties or facing imminent actions from creditors. However, obtaining immediate relief by filing an emergency bankruptcy petition comes with its own set of potential complications and risks. 

Shorter Time to Prepare and Review Documents

One of the primary complications with emergency bankruptcy filings is the challenge of preparing and reviewing all necessary documents within a limited time frame. In typical bankruptcy cases, debtors have sufficient time to carefully prepare and review their financial records, assets, debts, and other essential information before filing with the court. This typically means the debtor and their attorney have time to ensure that all information and documentation is accurate and complete, minimizing the risk of errors or omissions.

In contrast, emergency bankruptcy filings typically involve a frantic situation where the debtor desires immediate relief to stop a specific creditor action, like a foreclosure or wage garnishment. As a result, there may not be enough time to thoroughly review and prepare all the necessary documents, increasing the risk of mistakes or incomplete information being submitted to the court. This rushed process may lead to difficulties during the bankruptcy proceedings, as well as potential disputes or objections from creditors who may question the accuracy or completeness of the information provided.

Incomplete Documentation Could Lead to Case Dismissal

When a debtor files an emergency bankruptcy petition, they are generally only required to submit a minimal set of documents to initiate the bankruptcy case. However, they are then given a limited amount of time, usually 14 days, to submit the full set of required documents to support their case. Failure to submit these additional documents on time or correctly can result in the dismissal of the case, effectively negating the benefits of the emergency bankruptcy filing.

Even if a debtor succeeds in submitting all necessary documents, it is still possible for the bankruptcy court to dismiss the case if the judge determines that the debtor does not qualify for bankruptcy relief, has filed the case in bad faith, or there are other deficiencies in the paperwork or submission. Such outcomes can be devastating for debtors who have filed an emergency bankruptcy to halt specific creditor actions, as their protections against those actions vanish with the dismissal of the case.

Risks Associated with Using the Wrong Forms or Incorrect Information

Filing for emergency bankruptcy increases the likelihood of using the wrong forms, making errors, or submitting incomplete or incorrect information to the court. These mistakes may include providing insufficient detail on assets, debts, and creditors or incorrectly calculating the debtor’s eligibility for bankruptcy relief.

In some cases, these errors can be corrected by amending the bankruptcy petition or submitting additional documentation to the court. However, such amendments may require additional time and resources, and may also be subject to scrutiny from creditors, the bankruptcy trustee, or the court itself. Certain errors may even lead to a judge dismissing the case altogether or imposing fines and penalties on the debtor.

Additional Stress Due to Rushed Filing Process

Finally, perhaps the most overlooked aspect of emergency bankruptcy filings is the stress and mental toll it takes on the debtor. Filing for bankruptcy can be an emotional and anxiety-ridden experience, even under the best of circumstances. However, rushing to file an emergency bankruptcy can exacerbate these feelings, as the debtor scrambles to gather paperwork, make decisions about their financial future, and potentially face the consequences of mistakes made in haste.

The stress and emotional strain associated with filing an emergency bankruptcy may cause the debtor to overlook important aspects of their case, make impulsive decisions that impact their financial future, or simply not be as prepared for the hearings and legal proceedings as they should be. While it may not be a direct legal risk, it is an important consideration for those contemplating an emergency bankruptcy filing.

Alternatives to Emergency Bankruptcy Filing

Filing for bankruptcy should always be considered a last resort, especially in emergency situations. Emergency bankruptcy filings are typically done when a debtor is facing imminent foreclosure or repossession of their property due to debt. Bankruptcy can be an effective method for stopping these actions and giving the debtor some breathing room to figure out a plan for their financial situation. However, bankruptcy comes with long-lasting consequences that can have a severe impact on your credit and ability to obtain future financing. Fortunately, there are alternative solutions to emergency bankruptcy filings that can address debt problems without leaving such a harsh financial stain.

Debt Settlement and Negotiation

One alternative to an emergency bankruptcy filing is debt settlement and negotiation. This process involves negotiating with creditors to reduce the total amount of debt owed, making it more manageable for the debtor to repay. This option can help you avoid bankruptcy while still addressing your financial difficulties. Debt settlement does not require legal intervention, and it often results in lower monthly payments, reduced interest rates, and waived late fees.

It is important to note that debt settlement may negatively affect your credit score, as it may involve paying less than the total amount owed or making late payments. However, this negative impact is usually less severe than the long-lasting consequences of bankruptcy. Professional debt settlement companies can assist in negotiating with creditors to reach an agreement, but be cautious when selecting a company, as there are some that may be fraudulent or charge high upfront fees.

Debt Consolidation and Management Plans

Debt consolidation and management plans are other options for those seeking alternatives to an emergency bankruptcy filing. These plans involve consolidating multiple debts into one manageable monthly payment. A debt management plan (DMP) goes one step further by working with a credit counselor to create a tailored repayment strategy. The counselor will negotiate with creditors to reduce interest rates and waive fees, making it easier for individuals to pay off their debts within an agreed-upon timeframe.

Although both debt consolidation loans and debt management plans can help debtors regain control over their finances, they may not be suitable for everyone. These options often require a stable income and discipline to make consistent payments. Additionally, they may not be as effective if the total debt is too high or if the interest rate on the consolidation loan is not competitive.

Credit Counseling Services

Credit counseling services are a valuable resource for individuals seeking alternatives to emergency bankruptcy filing. The law mandates that anyone who files for bankruptcy must go through credit counseling. These services offer free or low-cost financial education and counseling to help clients understand their financial situation, create a budget, and determine the best course of action to resolve their debt problems. Credit counselors can also help debtors get enrolled in debt management plans, as previously mentioned.

By working with credit counseling services, individuals can get a clear picture of their financial situation and learn about the different options available to them, such as debt settlement or consolidation. Keep in mind that engaging in credit counseling may not directly improve your credit score, but it can provide guidance toward making more informed financial decisions that lead to long-term improvements in your credit and overall financial health.

Choosing the Right Option for Your Situation

There is no one-size-fits-all solution when it comes to addressing debt issues, so it’s important to carefully consider the options available and choose the one that is most appropriate for your unique circumstances. Some key factors to consider when evaluating your options include your total amount of debt, your income, your credit score, and your ability to make consistent payments.

Whether it’s debt settlement, consolidation, management plans, or credit counseling services, carefully evaluating each option and seeking professional advice can help you make the right decision, avoiding the severe consequences of an emergency bankruptcy filing. Remember, each individual’s financial situation is unique, and it’s crucial to take the time to understand your specific circumstances before deciding on an alternative solution.

Get the Help of An Experienced Emergency Bankruptcy Attorney in New Jersey

When considering filing for bankruptcy, it’s crucial for individuals to have the guidance of a legal representative who can lead them through the process and present alternative options tailored to their unique situation. At Straffi & Straffi, we serve our clients with empathy, diligence, and honesty. We recognize that even with careful planning and good intentions, financial difficulties such as bankruptcy can occur unexpectedly. That’s why our team of skilled lawyers, including experienced bankruptcy attorney Daniel Straffi Jr., understands the significance of safeguarding your financial well-being. If you’re struggling with debt, we offer legal advice and representation that may help. Our law firm has been providing legal services in bankruptcy cases for Central and Southern New Jersey for the past eight years. Contact us today at (731) 341-3800 for a free consultation.

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