Timeline of Filing a Chapter 7 Business Bankruptcy Petition in New Jersey
As is the case with personal bankruptcy cases, there is a specific timeline of filing a Chapter 7 business bankruptcy petition in New Jersey. The process can, at times, seem overwhelming and complications may arise along the way depending upon the specifics of the case.
This makes it important to have an experienced professional to guide you, as a business owner, through the process. An experienced attorney can be the advocate you need.
Understanding the Chapter 7 Bankruptcy Process
In a Chapter 7 business bankruptcy, all debts of the business are essentially wiped out because, at the end of the bankruptcy process, the business will be closed and all its assets liquidated.
While business owners are generally not required to meet the income eligibility requirements for filing under Chapter 7 that are applicable to individuals, in some circumstances the means test may apply. For example, if 51 percent or more of the debts are non-business debt, the person will be required to satisfy the Chapter 7 financial eligibility rules.
Beginning the Process in New Jersey
The person will be required to attend a credit counseling class and obtain a certificate of completion within 180 days before the opening of a bankruptcy case. The class can be taken over the phone, on the internet, or in person.
The next step is to actually file the petition. The bankruptcy petition is filed in one of three locations of the Bankruptcy Court Clerk’s office in New Jersey, based on where the principal place of business is located. At this time, the filing fee for Chapter 7 must also be paid by money order, certified check, or bank check.
After Filing the Petition
An automatic stay will begin to apply after filing and will require all creditors to cease collection activity. The court will send information regarding the creditors’ meeting and will provide creditors with information on how to object to the discharge of debt or relevant exemptions.
After filing under Chapter 7, the debtor will be required to attend a 341 meeting of the creditors. The court will send a notice with the date, time and place of the meeting. At this meeting, the trustee will ask questions about the finances under oath and the creditors may attend and may also ask questions.
The bankruptcy trustee will take control of the business’ assets and liquidate them to satisfy creditors to the extent possible. New Jersey does not exempt “tools of the trade” from sale in bankruptcy, so business owners in New Jersey may be best served by choosing to use the federal exemptions, which provide a $1,500 exemption for tools of the trade.
The debtor must also complete a debtor education course and file a certificate of completion with the court within 45 days after the creditors’ meeting or the case may be closed without discharge. Finally, discharge of debt usually occurs between 60 and 90 days after the creditors’ meeting, unless complications arise.
An Attorney Can Explain the Timeline of Filing a Chapter 7 Business Bankruptcy Petition in New Jersey
The process of filing for bankruptcy can seem overwhelming. In general, filing for bankruptcy is an extremely stressful time and the complexities of the process only add to that stress. However, you do not have to go through the process alone.
An attorney can explain the timeline of filing a Chapter 7 business bankruptcy petition in New Jersey so you do not miss any important deadlines. They can also advocate for you throughout the process to protect your rights and seek a favorable outcome.