What is Chapter 7 Bankruptcy and Should I File in 2021?

What is Chapter 7 Bankruptcy and Should I File in 2021?

Many Americans were met with a unique financial situation in 2020 and 2021. The pandemic led to a record number of unemployed people. Workplaces closed down and many people felt unsafe to return to work, even when they did reopen. If your financial situation was affected in 2020 or 2021, you might be wondering what your options are. You may have even considered bankruptcy.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a legal process that involves eliminating your debts, essentially allowing you to start over. Filing for Chapter 7 bankruptcy does require that you file and request approval and it may not be right for everyone. If it is right for you, however, it can be a good way to come out of a difficult situation.

What is Included in Chapter 7 Bankruptcy?

Filing a Chapter 7 bankruptcy allows you to eliminate the following types of debt:

  • Credit cards
  • Medical bills
  • Car loans
  • Personal loans

This does not include certain debts, including child support, tax debt, or student loans. Even if you successfully complete Chapter 7, these debts will remain on your credit.

How Does Chapter 7 Bankruptcy Work?

If you decide that Chapter 7 Bankruptcy is right for you, you’ll need to fill out and submit a collection of documents. You will need to provide information like:

  • How much you earn
  • How much you spend
  • How much you own
  • How much you owe

You’ll also need supporting documents for this information. This may include income statements, debt documents, and anything the local court requests. Once you submit the paperwork to the local court in New Jersey, a trustee will be assigned to your case. They will go over your paperwork, schedule a meeting, and make a decision.

If your case is approved, the court will issue an automatic stay. This stops anyone from collecting debt from you for a short period of time.

Is Chapter 7 Right for Me?

Before filing for Chapter 7 bankruptcy, you’ll want to first decide if it’s the right financial decision for you. There are other types of bankruptcy and it’s also important to know the potential consequences. Many experts recommend filing for Chapter 7 if you have more than $10,000 of eligible debt. You may also be eligible if you have a credit score that is below 600, you don’t have an expensive property with secured debt, and you are financially able to keep up with payments set by the trustee.

If you don’t believe that you will be able to pay back your debt within five years, it may make sense to file bankruptcy.

How Do I File Chapter 7 Bankruptcy?

If you decide that Chapter 7 bankruptcy is right for you, or you have additional questions about bankruptcy in general, it may be beneficial to reach out to a bankruptcy lawyer. Working with a bankruptcy lawyer is an important first step as they can help you evaluate your case and fill out your application accurately, improving the chances of it being accepted when filing.

Contact a Clifton Bankruptcy Attorney for a Consultation About Bankruptcy 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 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.