The idea of bankruptcy can be scary. You might not be ready for what’s to come after you file and the bankruptcy is finalized. There are quite a few options available to you when it comes to filing for bankruptcy. You need to take a good look at your financial situation and what you want to gain by filing for bankruptcy in New Jersey. For individuals, there are two options for bankruptcy, Chapter 7 and Chapter 13. We will take a look at both options in today’s post so you can make an informed decision when speaking with a bankruptcy attorney in New Jersey.
Chapter 7 Bankruptcy
When you choose Chapter 7 Bankruptcy you are choosing liquidation. You must turn over every single one of your assets to someone known as a trustee. The trustee is responsible for liquidating the assets and then paying the creditors the money they are owed by the person who filed for bankruptcy. A large portion of Chapter 7 bankruptcies do not result in the loss of assets, but instead the debtor receives a discharge of the unsecured debt that they have to their name.
In order to be eligible for Chapter 7 Bankruptcy you must be a debtor who has little or no disposable income to their name. This means that a large number of people who file for Chapter 7 likely do so because they cannot afford to repay the debts they have accrued to this point in life. This is in lieu of having the bankruptcy filing dismissed by the court or forcibly switched to Chapter 13.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is an option when the debtors can afford to pay some sort of repayment to their creditors, unlike Chapter 7 where they cannot afford to make any payments. Chapter 13 Bankruptcy is known as Individual Debt Adjustment, which means that it creates a repayment plan for the debtor instead of allowing them to discharge their debts. A person who files for Chapter 13 Bankruptcy only has to pay their creditor what they can afford to pay so long as it matches the amount they would have paid if they filed for Chapter 7 Bankruptcy. There is no negotiation for the repayment plan like credit counseling. The payments are determined at the time of the filing.
If you are worried about losing your home when filing for bankruptcy you should choose Chapter 13. This option allows you to keep your home. Mortgage lenders typically only allow repayment ranging from four to six months. The repayment plan of 60 months for Chapter 13 can provide you with a lot of breathing room.
Tax debt cannot be discharged with Chapter 7, but can be repaid using Chapter 13. A debtor can repay unpaid tax debt over a period of five years. The debtor must be able to afford the payments if they wish to enter into Chapter 13 Bankruptcy. Income tax debt can be eliminated if you choose to file using Chapter 7 so long as the money was due three years prior to filing for bankruptcy.
Contact a Clifton 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.