How to file bankruptcy in New Jersey

by Contributor ; Updated July 27, 2017

Bankruptcy is a common way of dealing with debt. Declaring bankruptcy allows people to escape their creditors and still have money to live on. New Jersey has certain laws that pertain to bankruptcy that you must know about before you declare and file bankruptcy in the state.

Step 1

Decide if you want to declare Chapter 7 bankpruptcy. There are two forms of bankruptcy: Chapter 7 bankruptcy and Chapter 13, both of which refer to different chapters of the federal bankruptcy codes. Chapter 7 bankruptcy is essentially a forced liquidation of all your assets. You will sell off everything you own -- with some important exceptions -- in order to pay your creditors. Once you have paid your creditors whatever you can, you will no longer own any money, even if your payoffs did not cover the full debt.

Step 2

Decide if you want to declare Chapter 13 bankruptcy. Chapter 13 bankruptcy is a system where you declare bankruptcy and are given a period of time such as three to five years to pay off your creditors. During this time you will have to report to a trustee. The guidelines for declaring bankruptcy vary from state to state and vary from filing to filing. New Jersey has certain specific rules for declaring bankruptcy.

Step 3

Decide which kinds of exemptions you wish to take. New Jersey law allows people declaring bankruptcy to keep certain specific assets. For example someone declaring bankrutpcy in New Jersey may keep a home that has roughly $20,000 in value in it. They can also keep items such as life insurance policies, alimony, pension benefits, a motor vehicle with roughly $3,000 in value, tools that are necessary for work and benefits such as a settlement relating to an injury.

Step 4

Decide if you would like to use the second form of exemptions available to New Jersey residents declaring bankruptcy. You may keep certain items such as a burial plot, retiree benefits that you have received from local and state governments, annuity contracts, disability earnings and life insurance proceeds.

Step 5

Hire a lawyer. Make sure that you hire a lawyer who understands the ins and out of New Jersey bankruptcy law. The lawyer should be familiar with local courthouses in each county. A lawyer should hold New Jersey state bar certification. Make sure the lawyer has all the documents you need to file for bankruptcy before submitting any paperwork.

Step 6

File for bankruptcy in court. You must file in local courts to declare bankruptcy. New Jersey has specific courts that deal with bankruptcy. Make sure that you have the right court. Call in advance to find out hours. You will have to pay a filing fee in addition to working with your lawyer. Filing fees vary from county to county in New Jersey so check carefully. Expect to pay roughly $1,000 in funds to make the bankruptcy declaration official.