Facing overwhelming debt can feel like a relentless storm. If you’re a New Jersey resident struggling to keep your head above water financially, you’re likely exploring all available options. Two of the most common paths to debt relief are Chapter 7 and Chapter 13 bankruptcy. As a New Jersey bankruptcy lawyer, I often guide clients through the intricacies of these processes, and understanding the key differences is the crucial first step in determining which might be right for you.
Think of Chapter 7 as a fresh start. It’s often referred to as “liquidation bankruptcy” because it involves the sale of certain non-exempt assets to pay off creditors. 1 The good news? Once the process is complete, most of your remaining eligible debts, such as credit card debt, medical bills, and personal loans, are discharged – meaning you are no longer legally obligated to pay them.
Who might Chapter 7 be right for? Generally, Chapter 7 is a viable option for individuals and families who:
- Have a significant amount of unsecured debt.
- Meet certain income requirements determined by the bankruptcy means test.
- Don’t have significant non-exempt assets they wish to protect.
On the other hand, Chapter 13 bankruptcy offers a repayment plan. Instead of liquidating assets, you work with the bankruptcy court to create a 3 to 5-year plan to repay a portion of your debts over time. This plan is based on your income and expenses, and it allows you to catch up on past-due mortgage payments, car loans, and certain tax obligations while protecting your assets.
Chapter 13 might be a better fit if you:
- Have valuable non-exempt assets you want to keep, such as your home or car.
- Are behind on secured debts like your mortgage or car loan and want to avoid foreclosure or repossession.
- Have a regular source of income that allows you to make monthly payments under a repayment plan.
- Don’t qualify for Chapter 7 due to the means test.
Navigating the New Jersey Landscape
It’s important to remember that bankruptcy laws can be complex, and specific procedures and exemptions apply in New Jersey. For instance, New Jersey has its own set of property exemptions that determine which assets you can protect in a Chapter 7 case. Understanding these nuances is critical to making informed decisions.
Don’t Face This Alone
Deciding between Chapter 7 and Chapter 13 is a significant decision with long-term financial implications. As an experienced New Jersey bankruptcy lawyer, I can provide you with a clear understanding of your options, evaluate your financial situation, and guide you through the entire process.
Here’s what working with a New Jersey bankruptcy attorney can offer:
- Personalized Assessment: We’ll analyze your specific financial circumstances to determine the best course of action.
- Understanding Exemptions: We’ll help you identify which of your assets are protected under New Jersey law.
- Navigating the Legal Process: We’ll handle all the paperwork, court filings, and communication with creditors.
- Protecting Your Rights: We’ll ensure your rights are protected throughout the bankruptcy proceedings.
If you’re feeling overwhelmed by debt and want to explore your options for a fresh start or a manageable repayment plan, I encourage you to reach out for a consultation. Taking that first step can be the beginning of your journey towards a brighter financial future right here in New Jersey.