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Am I eligible to file for Chapter 7 bankruptcy in New Jersey?

The cost of living in New Jersey is higher than many other places in the country, particularly when it comes to the cost of housing. Across all the counties in New Jersey, Monmouth County in particular can be one of the most costly counties to live in. These facts coupled with plummeting wages can place an exceeding amount of stress on residents that are already financially struggling.

Debt can quickly snowball: mortgage payments, credit card payments, car loans, medical bills, clothes for the kids and more. The Legal Services of New Jersey recently issued a report that shows that about a quarter of the state's full-time workers earn less than the costs required to meet just basic living expenses.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, can be a viable solution for many struggling with debt to be able to regain financial stability and control. At the end of Chapter 7 bankruptcy proceedings, all eligible debt will be discharged. However, there are certain stipulations for filing for Chapter 7 bankruptcy. A filer's eligibility is assessed through a "means test."

  • How much money do you earn? If you earn less than the median income for a family your size in New Jersey, then you are eligible to file a Chapter 7 bankruptcy.
  • How much debt do you have? Even if a debtor makes more than the median income, if the amount of disposable income left over after paying all allowed expenses for living is below a certain threshold, the debtor could still qualify for a Chapter 7 bankruptcy.
  • The type of assets an individual owns and bankruptcy history also factor into eligibility, so speaking with an experienced attorney can ensure that even for qualifying individuals this is the best route.

The president of the group that issued the report says, "What we are seeing is that hundreds of thousands of people, even when holding down one and sometimes a second job, are still unable to keep up with rising living costs."

Debt can be stressful to the point of agonizing, but there is help available. Even for individuals that do not qualify for a Chapter 7 bankruptcy, a Chapter 13 bankruptcy can still be a viable alternative to help an individual reorganize their debt. Bankruptcy and all of the factors that funnel into it can feel confusing, but an experienced attorney can assist an individual struggling with debt assess their financial picture and take the best steps to regain financial security.

Source: NJtoday.net, "Study Shoe Real Cost of Living in NJ," May 9, 2013

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