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Chapter 7 vs. Chapter 13 Bankruptcy in New Jersey

The decision to consider bankruptcy — and then to file bankruptcy — is difficult enough. Determining and/or deciding whether to file Chapter 7 versus Chapter 13 bankruptcy is another matter altogether.

For some people, there is the question of whether they can file Chapter 7 bankruptcy. Chapter 7 wipes out more debt, more quickly, in most cases. For other people it is a question of whether Chapter 13 might be more advantageous.

Can You File Chapter 7 Bankruptcy? Should You?

A required means test will determine whether a debtor will qualify to file Chapter 7. Most people approaching bankruptcy prefer the idea of a Chapter 7 bankruptcy once they understand its power to offer a financial fresh start.

A successful Chapter 7 discharge normally eliminates credit card debt, medical debt, installment loans, personal loans and certain other debts. It generally takes a few months to complete. Most Chapter 7 bankruptcy filers keep all their assets while eliminating most or all of their debts. These benefits make Chapter 7 bankruptcy attractive for many debtors.

Is Chapter 13 Your Only Option? If Not, Is There Any Reason to Choose Chapter 13?

By contrast, a Chapter 13 bankruptcy reorganizes debts, to be repaid (fully or partially) in manageable monthly payments over three to five years. There is no benefit to one's credit report for repaying portions of debts versus having those debts eliminated. However, some debtors have significant assets (such as large amounts of home equity) that could be lost through the liquidation feature of Chapter 7 bankruptcy. Many of them are in arrears with mortgage payments and at risk of foreclosure. For these debtors, a Chapter 13 bankruptcy can help them keep their house by repaying mortgage arrearage over three to five years. Chapter 13 in certain circumstances can also eliminate second or third mortgages.

Which Type of Bankruptcy? Contact a Newark Chapter 7 Attorney for Personalized Advice.

As you prepare for bankruptcy and consider the pros and cons of Chapter 7 versus Chapter 13 bankruptcy in New Jersey, it is prudent to discuss your debt situation with an experienced lawyer. Call our experienced Essex County, New Jersey, bankruptcy lawyers today for a free one-half hour consultation at 973-677-9000 or 888-827-5493. Our lawyers serve Essex, Union, Hudson, Passaic, Bergen, Morris, Middlesex, Sussex and other New Jersey counties.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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PROFESSIONAL ASSOCIATIONS

  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates