What Typically Happens In A New Jersey Bankruptcy Case?

A New Jersey Bankruptcy Debtor begins a New Jersey Chapter 7 Bankruptcy Case by filing papers with the New Jersey Bankruptcy Court called a "petition" and by paying a filing fee to the New Jersey Bankruptcy Court.

About a month after the New Jersey creditor files their New Jersey Bankruptcy petition, the New Jersey Bankruptcy trustee holds a meeting of creditors, also called a "341 hearing." The New Jersey Bankruptcy 341 hearing is usually held in an office building. Before the New Jersey Bankruptcy 341 hearing, the representative of the New Jersey Bankruptcy trustee's office conducting the hearing may ask the New Jersey Bankruptcy Debtor or their attorney to give the New Jersey Bankruptcy trustee copies of documents for the New Jersey Bankruptcy Trustee to examine.

At the New Jersey Bankruptcy 341 hearing, a representative from the New Jersey Bankruptcy trustee's office (which may be the New Jersey Bankruptcy trustee themselves), the New Jersey Bankruptcy Debtor, their attorney (if they are represented by an attorney) and any creditors or their attorneys who are interested in the New Jersey Bankruptcy Debtor's case appear. The representative of the New Jersey Bankruptcy trustee swears in under oath the New Jersey Bankruptcy Debtor and questions the New Jersey Bankruptcy Debtor under oath about the New Jersey Bankruptcy Debtor's financial situation.
After putting the New Jersey Bankruptcy Debtors under oath, the representative of the New Jersey Bankruptcy Trustee's office who handles the hearing ask the New Jersey Bankruptcy Debtor questions to make sure the New Jersey Bankruptcy Debtors understand what might happen when they ask the New Jersey Bankruptcy Court for a New Jersey Bankruptcy Court discharge, which could include:

  • how a Chapter 7 New Jersey Bankruptcy filing might affect the New Jersey Bankruptcy Debtors' credit history.
  • the New Jersey Bankruptcy Debtor's option to file a New Jersey Bankruptcy Case under a Chapter other than 7 (such as a Chapter 13 New Jersey Bankruptcy Case).
  • what happens if the New Jersey Bankruptcy Debtor receives a New Jersey Bankruptcy Court Discharge
  • what happens if the New Jersey Bankruptcy Debtor reaffirm a debt that the if the New Jersey Bankruptcy Debtor owes a creditor.


 

It is not uncommon for the New Jersey Bankruptcy Trustee's office to give a handout about what happens when a New Jersey Bankruptcy Debtor files for Bankruptcy.

At the New Jersey Bankruptcy 341 hearing, creditors of the New Jersey Bankruptcy Debtors or the creditors' attorneys, if the creditors have an attorney, may ask the New Jersey Bankruptcy Debtors certain questions about debts and property.

Within 10 days of the meeting, the New Jersey Bankruptcy Trustee sends a report to the New Jersey Bankruptcy Court about whether the New Jersey Bankruptcy Case should be presumed to be an abuse under the New Jersey Bankruptcy means test.

If all of the New Jersey Bankruptcy Debtor's assets are exempt or legitimate liens apply to the New Jersey Bankruptcy Debtor's assets, the New Jersey Bankruptcy trustee normally files a "no asset" report with the New Jersey Bankruptcy Court. The filing of a "no asset" report means that creditors with claims not secured by property receive no assets from the New Jersey Bankruptcy Debtor's Bankruptcy. Most Chapter 7 New Jersey Bankruptcy Cases where the New Jersey Bankruptcy Debtors are individuals instead of businesses are "no asset" type cases.

If the New Jersey Bankruptcy trustee thinks there are assets to distribute to creditors from the New Jersey Bankruptcy Debtor's Chapter 7 case, creditors without secured claims must file their potential claims with the New Jersey Bankruptcy Court within a certain time after the first scheduled New Jersey Bankruptcy 341 hearing. If the New Jersey Bankruptcy trustee recovers assets for distribution to unsecured creditors, the New Jersey Bankruptcy Court gives notice to the creditors and gives them time to file proofs of claim. In some New Jersey Bankruptcy Cases, secured creditors may file proofs of claim to protect their interests.

If there are assets in the New Jersey Bankruptcy estate for the New Jersey Bankruptcy Trustee to liquidate, the New Jersey Bankruptcy Trustee attempts to liquidate those assets to maximize the return to the New Jersey Bankruptcy Debtor's unsecured creditors. The New Jersey Bankruptcy Trustee sells the New Jersey Bankruptcy Debtor's nonexempt property that is not secured by liens or that is secured by liens but that is worth more than any security interest or lien attached to the property and any exemption to which the New Jersey Bankruptcy Debtor is entitled. The New Jersey Bankruptcy trustee may try to recover assets transferred to creditors a certain number of days before the filing of the New Jersey Bankruptcy Debtor's Bankruptcy Case or that were transferred to avoid creditors or to undo security interests and other property transfers not properly perfected. If the New Jersey Bankruptcy Debtor is a business, the New Jersey Bankruptcy Court may allow the New Jersey Bankruptcy trustee to run that business for an amount of time to benefit creditors and help with liquidation of the New Jersey Bankruptcy estate.