Deciding When to File for Bankruptcy in New Jersey
If you find yourself deep and debt and do not know what to do, filing for bankruptcy may be a viable option. But the thought of tackling bankruptcy can be a daunting one, especially when you know that not all debts can be eliminated. Here is a short guide to the two types of personal bankruptcy relief and which debts can and cannot be eliminated through the process.
Types Of Personal Bankruptcy
While you may have heard of Chapter 11 bankruptcy during the economic crisis, that section of the law is not the most commonly used. If you are looking for personal debt relief, the two types listed in the Bankruptcy Code are Chapters 7 and 13. Chapter 13 bankruptcy is vastly different from Chapter 7. With Chapter 13, the person restructures their debt instead of eliminating it. This is often used by people who have a steady income and wish to avoid foreclosure on their house. Chapter 7 bankruptcy, on the other hand, is the most common and simple form of bankruptcy. The debtor’s non-protected assets are sold off as per the Bankruptcy Code’s direction under court supervision to pay off certain debts. In exchange, a number of personal debts can be discharged.
Debts That Can Be Discharged
One of the greatest advantages that a Chapter 7 bankruptcy provides is that certain personal debts are completely wiped out after the process is finished, whether or not the full amount is repaid.
Just a few of these debts include:
- Medical bills
- Personal loans
- Credit card debt
- Utility bills
- Dishonored checks
Civil judgments and attorneys fees can also be waived, as long as it wasn’t fraudulent actions. The Bankruptcy Code lists the debts that can and cannot be discharged, so be sure to contact an attorney to check which of your debts you might still be stuck with after a bankruptcy. This can help make the decision whether to file for Chapter 7, 13, or try another method to help pay off your debts.
Debts That May NOT Be Discharged
The most common non-dischargeable debts are liens and federal student loans. Although a lot of debts are wiped by Chapter 7, valid liens placed on real estate or other personal property still apply. These are known as secured debts and are not dischargeable because the debt is “secured” by an interest in that particular property. For the same reason, federal student loans cannot be swept after Chapter 7 completion. Child support payments and spousal support judgments also cannot be discharged. Any debts acquired by or based on fraud is fair game even during or after bankruptcy, so be careful. The details do matter.
Seek Legal Help!
When it comes to complicated financial matters like bankruptcy, you definitely need an expert on your side. An attorney well-versed in tax and bankruptcy law will be your advocate during any procedures and help you to protect as many of your assets as possible. Do not tackle such a massive and complicated task alone.
Contact A New Jersey Bankruptcy Attorney to Discuss Your Case 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 skilled attorneys at Silverman and Roedel, LLC represent clients in bankruptcy proceedings in Paterson, Wayne, Newark, East Orange, Hackensack, Garfield, and everywhere else in New Jersey. Call (973) 772-6411 or fill out our online contact form to schedule a consultation about your case. We have an office conveniently located at 1187 Main Avenue, Suite 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.