If you find yourself in serious debt with no foreseeable way out, you can find yourself feeling very “doom and gloom.” Luckily, there are options for people who are seriously financially suffering to escape the endless spiral of interest and debt payments. Bankruptcy is available to most individuals in order to eliminate debts and basically get a “do over.” There are different types of bankruptcy and each type has limitations on what it can do for a suffering individual. We go over three common questions about bankruptcy that financially-strained individuals usually ask below.
Can Bankruptcy Eliminate All of My Debts?
Although bankruptcy can eliminate most debts, there are certain types that are protected from a bankruptcy status. For the most part, if a debt is owed to a “secured” creditor, bankruptcy cannot completely protect you. This essentially means that if a creditor holds certain collateral such as a mortgage or car, they cannot be protected
Types of finances and debts that cannot be covered by bankruptcy include:
- Most college loan debt
- Certain taxes
- Debts incurred 180 days prior to bankruptcy filing
- Child Support
- Loan obtained through fraud
What Are the Differences Between Chapter 7 and Chapter 13 Bankruptcy?
Yes there are definitely difference between chapter 7 and chapter 13 bankruptcy. Chapter 7 bankruptcy does not protect you from things like loss of property and home foreclosures. If you file bankruptcy under chapter 7, many times a bank or creditor can seize certain property like a house, boat, or car to help cover such debts owed to them. Chapter 7 bankruptcy may free you of all of the debt responsibility but it does not protect your belongings.
In chapter 13 bankruptcy, however, you can protect your property from being forfeit. This type of bankruptcy does not completely eliminate your debt. Instead, you agree to a negotiated payment plan in which you make a reasonable and doable payment on time, usually once a month, for a decided period of time. As long as you pay for that amount of time consistently and without delinquency, your debts are considered paid off in the end and you get to keep your house and/or car.
Is there a Suggested Debt Level I Should Be at Before I Consider Bankruptcy?
This question is subjective, as what level of debt should be considered a serious detriment or threat highly depends on the person who is debt. If you have a Phd and have a high paying job, a measly 100 grand might not be an impossible financial hole to climb out of. But someone with three children, going through a divorce, and a minimum wage job may find that impossible as interest grows and bills keep running them down. There is no suggest number or level. It should be something that is done after attempting to work with your creditor and use other methods. It is a last ditch attempt when options are exhausted, your income can’t get you out of debt overtime while paying for basic living costs, or you are at a level where your property may be taken from you to cover it. If you feel your debt level is high enough, then it is high enough.
Contact a Wayne Bankruptcy Attorney for a Consultation About Your Case in New Jersey Today
If you are struggling with debt, you may need a fresh start financially. An experienced bankruptcy and debt relief attorney can help you explore your options and determine the best course of action for you, your family, and/or your business. The experienced New Jersey bankruptcy lawyers at The Law Office of Silverman & Roedel understand the nuances of New Jersey and federal bankruptcy laws, so we can help you protect your interests. Call us anytime at (973) 772-6411 or fill out the online contact form to schedule a confidential consultation. We have an office conveniently located at 1187 Main Ave #2C, Clifton, NJ 07011.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.