When you are swimming in unpayable debt, filing for bankruptcy may be a viable option to help prevent harassment by creditors and an inability to make a living. During bankruptcy proceedings, the way your different debts will be treated will depend on several factors including the type of bankruptcy you file for and the type of claim the creditor has against you.
Debt Categories During Bankruptcy
Debts fall into three main categories:
• Secured claims
• Unsecured claims
• Priority claims
The first type of debts, secured claims, include creditors who have a lien on property you own. Most commonly, these types of debts are car loans or mortgages. Depending on the type of bankruptcy you claim, you may need to consider whether you will have to surrender some of your assets. If you want to keep your property, then there is a possibility you may be ordered to continue making payments. Unsecured claims, on the other hand, are debts that are not backed by any type of collateral. The most common types of nonpriority unsecured claims are credit card debts, personal loans, and medical bills. Most of these types of debts can be forgiven during bankruptcy proceedings. Priority unsecured claims are given special treatment because of the nature of the debt. Common forms of priority debts include past-due alimony payments, tax obligations or child support. These debts are usually not discharged despite bankruptcy, and debtors may still be required to pay the full amount depending on their repayment plan.
Chapter 7 or 13 Bankruptcy in Clifton, New Jersey
The way your debts will be handled hinges on whether you file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy allows the debtor to liquidate some assets and have certain debts forgiven. This common form of bankruptcy helps individuals get rid of the majority of their debts, but some of your property may have to be forfeited. Chapter 13 bankruptcy allows the debtor to keep their property and create a repayment plan to pay off their debts within a certain time frame. This type of payment plan allows debtors to make up arrearages and even keep their homes in the face of foreclosure or vehicles in the face of repossession.
Contact a Clifton Bankruptcy Attorney for a Consultation About Filing for Chapter 7 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 NJ 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.