Chapter 7

Call us at 856-692-7474!

1. What is a Chapter 7 bankruptcy?
A Chapter 7 bankruptcy, often referred to as “liquidation”, contemplates an orderly,
court-supervised procedure by which a trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors.
In most Chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The debtor normally receives a discharge just a few months after the petition is filed.
Filing a Chapter 7 petition “automatically stays” (stops) most collection actions against
debtors or their property. As long as the automatic stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or demand payment. However, there are a number of exceptions to the automatic stay (a criminal proceeding, for example), and in some instances the automatic stay may only be in place for a short period of time.

2. What does the debtor need to do before filing a Chapter 7 bankruptcy?
Before filing a Chapter 7 case, an individual debtor must obtain credit counseling
from an approved credit counseling agency. The debtor must receive credit counseling during the 180 days before the bankruptcy petition is filed. If the debtor is married and filing a joint petition, both debtors must obtain credit counseling. Credit counseling may be conducted over the phone, over the internet or in person. When the credit counseling is completed, the credit counseling agency issues a credit counseling certificate.
When the petition is filed, you must file the credit counseling certificate. Note: Credit Counseling is not the same as the Personal Financial Management
Course (Debtor Education). The Personal Financial Management Course is required
AFTER the petition is filed and must be completed before receiving a discharge. See
question 17 below for more information.

3. Who is eligible to file a Chapter 7 bankruptcy?
A debtor must complete Official Form B22A - Statement of Current Monthly Income and
Means Test Calculation. (commonly referred to as the Means Test)
To be eligible to file a Chapter 7 case, the debtor’s current monthly income, as calculated on Official Form B22A, may not be higher than the state median income. If the debtor’s current monthly income is higher than the state median income, it is determined that the debtor could repay a level of unsecured debt and the filing of a Chapter 13 case may be appropriate. If the debtor still wants to file a Chapter 7, it is presumed that the filing is an abuse of the Chapter 7 process and you must check The Presumption arises box on Official Form B22A.

4. Where is the petition filed?
The petition and all documents relating to the bankruptcy case must be filed at the
Bankruptcy Court Clerk’s Office located in the geographic area (commonly referred to as
vicinage) in which the debtor resides, or in which the debtor has its principal place of business.

The Bankruptcy Court for the District of New Jersey is divided by county into three vicinages:

The Camden vicinage consists of Atlantic, part of Burlington (the townships of
Cinnaminson, Delran, Edgewater Park, Evesham [Marlton], Maple Shade, Moorestown, Mt.
Laurel, Palmyra, Riverside and Riverton), Camden, Cape May, Cumberland, Gloucester and
Salem counties.

The Newark vicinage consists of Bergen, Essex, Hudson, Morris, Passaic , Sussex and
Union counties.

The Trenton vicinage consists of part of Burlington (excluded are the townships of
Cinnaminson, Delran, Edgewater Park, Evesham [Marlton], Maple Shade, Moorestown, Mt.
Laurel, Palmyra, Riverside and Riverton), Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset and Warren counties.

5. What is the fee to file a Chapter 7 petition?
The filing fee for a Chapter 7 petition is $299.00. The court does not accept cash or
personal checks. Payment may be made by money order, certified check, debit card or bank check. Payments must be made payable to the Clerk, United States Bankruptcy Court. The court will also accept credit cards previously approved by the court. If the full filing fee cannot be paid at the time the petition is filed, individual Chapter 7
debtors may apply for an installment schedule or a waiver of the fee. To pay the filing fee in installments, your attorney must file Form 3A - Application to Pay Filing Fee in
Installments. Debtors can make up to four installment payments. The final installment must be made within 120 days after the petition is filed. If the debtor fails to pay any installment when due, the case may be dismissed and the debtor will not receive a discharge of debts.

6. What happens after all required documents are filed?
Shortly after the petition is filed, the United States Trustee appoints a trustee and the
court will issue a Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors & Deadlines. This notice is sent to all creditors in the case and contains the following information:
• Debtor’s name
• Date/time/location of the First Meeting of Creditors (also known as 341 Meeting)
• Deadline to file a complaint objecting to discharge or dischargeability of debts
• Deadline to object to exemptions

7. What is the First Meeting of Creditors and how should the debtor prepare for this meeting?
All debtors MUST attend the First Meeting of Creditors. Failure to attend may result in
the dismissal the debtor’s case. If a married couple files a joint case, both debtors must appear at the meeting. At the meeting, the Chapter 7 Trustee will ask the debtor questions, under oath, about what he or she owes and owns, and debtor’s income.

8. After filing, what happens to creditors’ collection activities against the debtor?
Once the petition is filed with the court, the automatic stay will go into effect. The
automatic stay is an injunction that automatically stops lawsuits, foreclosure, garnishments and all collection activity against the debtor by their creditors for any debt which arose before the filing.

9. What is a discharge and how does the debtor receive the discharge?
A discharge releases a debtor from personal liability of certain debts known as
dischargeable debts, and prevents the creditors owed those debts from taking any action against the debtor or the debtor's property to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.

Call us at 856-692-7474!

Web Design and Development By Townsware Corp.