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Bankruptcy Requirements – Who May be a Debtor

Chapter 7 bankruptcy is for the purpose of liquidation and the Chapter 13 and Chapter 11 bankruptcies are designed for the purpose of reorganizing debt.

A debtor must either reside, have a domicile, place a business, or own property in the United States.

As explained in our section on required bankruptcy documents in New Jersey, a consumer debtor must provide the attorney with the following documents, in connection with a chapter 7 and chapter 13:

  • Copies of federal income tax returns for the last four years;
  • proof of all sources of income for husband and wife;
  • proof of income for any individual residing in the household for the six month period prior to the filing;
  • copy of Domestic Child Support Court Order(s);
  • list of all personal and real property and the value of each;
  • Comparative Market Analysis
  • (This is a specific statement or letter by the real estate sales’ representative (broker) stating their opinion of the fair market value of the property. This statement must be on the real estate broker’s letter head. A copy of the sale’s price of similar properties, from the internet, without the statement or letter, is not acceptable to the trustee.);

  • most recent bills from all creditors.

Chapter 13 is limited to an individual. This means that only an individual may be a debtor and not a corporation, LLC, or partnership. An individual may file a joint case with their spouse, only. The filing may be for business or consumer debt. An individual who operates a business under a name, other the individual’s name, without forming a partnership, corporation or limited liability company is referred to as operating under a, “fictitious name” or, “doing business as” (d/b/a/). An individual may file a chapter 13 case for themselves and the business. An example of the name of the debtor, who files a chapter 13 under that scenario is, “John Smith d/b/a/ Smith’s Landscaping”. Both the business and consumer debt would be included in the chapter 13 case.

A chapter 13 debtor’s unsecured debts are limited to $336,900 or less and their secured debts are limited to $1,010,650 or less. Therefore, any individual who wishes to reorganize their debt, who has more than $336,900 of unsecured debt or $1,010,650 of secured debt must file a chapter 11. Although unusual, an individual may file a chapter 11 case, with less than the aforementioned values, as well.

A corporation, LLC, individual, or partnership may file for Chapter 7 and/or Chapter 11 bankruptcy protection. There is no limitation or debt requirements with regard to a Chapter 7 and a chapter 11 bankruptcy. Generally, an individual would only file for Chapter 11 protection, if they do not meet the debt limitation requirements for Chapter 13.

An individual may not file a second bankruptcy in New Jersey if the individual was a debtor in a previous case within 180 days prior to the filing, which was: dismissed for willful failure to obey a court rule: or failure to properly proceed with the case; or the case was voluntarily dismissed after a creditor requested from the court permission to proceed against the debtor. Please note that it is extremely unusual for a debtor to be denied an opportunity to re-file, under these provisions. Typically, individuals are permitted to re-file. The laws regarding refilling are indicated in a separate portion of this website.

Also, prior to filing the debtor must obtain credit counseling briefing from an approved credit counseling agency during the 180 period preceding the date of the bankruptcy filing. The agency must provide a certification of the briefing, which must be filed with the court.