The Cassidy Law Firm Blog

Wednesday, March 5, 2014

Can I File a Chapter 7 Bankruptcy in Middlesex County?

Regardless of how dire your financial situation is the decision to file bankruptcy will likely not be an easy one. If you are considering bankruptcy in Middlesex County New Jersey, or have already reached the conclusion that bankruptcy is your best option, you will need to decide which chapter to use when you file. Most individual (or married) debtors filer a chapter 7 or a chapter 13 bankruptcy. As a general rule, most debtors who qualify to file a chapter 7 bankruptcy choose to do so because a chapter 7 bankruptcy typically does not require the debtor to repay debts. This leads to the question “Can I file a chapter 7 bankruptcy in Middlesex County?”

Chapter 7 Bankruptcy in Middlesex County

Chapter 7 bankruptcy was designed to provide relief for debtors who do not have the ability to repay excessive debt caused by factors beyond their control such as a medical emergency or the loss of a job. In a chapter 7 bankruptcy most debts are simply discharged, or eliminated, without the debtor having to repay them. Chapter 13 was intended for debtors who do have the ability to repay debts but who need additional time to do so. In years past, however, the bankruptcy rules were much more lenient with regard to who could file a chapter 7 bankruptcy which led to considerable abuse of the bankruptcy process. Debtors who clearly had the ability to repay debts used a chapter 7 bankruptcy to simple discharge their debt. For this reason, the “means test” was implemented in 2005.

The “means test” requires you to perform a number of calculations designed to compare your income with similarly situated households in the same geographic area. If your income is below the median for the area then you qualify to file a chapter 7 bankruptcy. If your income is at or above the median you will need to provide additional information and do additional calculations to determine if you are eligible to file chapter 7. If your income is over the median income in your geographical area, and you do not pass the “means test,” you will have to file using another chapter. Just because you qualify to file a chapter 7 does not obligate you to use that chapter. If, for example, you have valuable non-exempt assets that would be sold in a chapter 7 bankruptcy and you wish to protect those assets you may choose to file a chapter 13 bankruptcy even though you qualify for a chapter 7.

To determine if you qualify to file a chapter 7 bankruptcy in Middlesex County, consult with an experienced New Jersey bankruptcy attorney.


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