Chapter 7 bankruptcy is a type of debt relief that allows you to get rid of your debt and essentially start over. There are two main types of bankruptcy, with Chapter 7 being one of your available options. This type of bankruptcy differs in that instead of restructuring your debt, which is referred to as Chapter 13, it is erased.
Whether filing for bankruptcy is the right choice for you, and which type, depends on your financial situation. It can be helpful to look at the pros and cons of filing Chapter 7.
Pros of Chapter 7 Bankruptcy
Here are a few pros:
- Protection from collection actions: Once you file a Chapter 7, you are put into an automatic stay protection. This stops debtors from taking collection actions towards you.
- Protection of your wages: A Chapter 7 bankruptcy also protects your wages from garnishment.
- Ability to keep your assets: Unlike other types of bankruptcy, Chapter 7 does not require that you sell off your assets.
- Permanent protection: Chapter 7 also gives you permanent protection against creditors.
Cons of Chapter 7 Bankruptcy
Here are a few cons:
- Information is available to the public: Because a Chapter 7 bankruptcy goes on the court’s docket, it is public information.
- Not everyone is eligible: You must meet certain eligibility requirements to qualify for Chapter 7 bankruptcy.
- Take a hit to your credit: A bankruptcy will reduce your credit rating. But, if you already have less-than-perfect credit, it can be a good way to start over.
- It doesn’t cover all debts: Some debt types may be excluded from Chapter 7 bankruptcy, including student loans, taxes, government fees, or fraudulent fees.
It is always a good idea to evaluate the pros and cons of filing for bankruptcy. Find out how it will affect your financial situation and if it will remove most of your debt.
Do You Need a Lawyer for Bankruptcy?
You don’t technically have to work with a lawyer to file for bankruptcy, but there are a few reasons to do so. Not only can a bankruptcy lawyer help you decide if filing for bankruptcy is right for you, but they can also help you choose the right type of bankruptcy for your financial situation. Your bankruptcy lawyer may also offer other benefits, like negotiations with your creditors. Depending on your amount and type of debt, you may have other options available.
Also, not everyone is eligible for bankruptcy. A lawyer can help you calculate your debt versus finances. You also may need to value your assets, including your home or vehicles.
Filing for bankruptcy, regardless of which one you choose, also requires the completion of paperwork. Even minor errors on this paperwork can slow down the process or lead to your filing being denied. Even if you are granted 7 Bankruptcy, that doesn’t always stop creditors from harassing you. Your lawyer can put an end to that and ensure they follow the Chapter 7 bankruptcy laws.
Contact a Ringwood Bankruptcy Attorney for a Consultation 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 Silverman & Roedel, LLC 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 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.