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Chapter 13 bankruptcy offers debt relief to New Jersey residents

For New Jersey residents who are facing insurmountable debt but have incomes that make them ineligible for Chapter 7 bankruptcy, Chapter 13 may provide just the debt relief for which they are hoping. Chapter 13 bankruptcy, sometimes referred to as reorganization bankruptcy, reorganizes debts to allow the consumer to pay just a portion of the outstanding debts. Also known as a "wage earner's plan," Chapter 13 also allows the filer to keep assets, so it may be a great option for those worried about losing property or nonexempt assets.

A Chapter 13 bankruptcy filing, once approved, allows filers to repay a portion of their debts through a court-approved repayment plan that lasts either three or five years. After the plan has been completed, any remaining discharge-eligible debts are typically cleared away. In addition, if a medical emergency or other financial hardship – such as loss of employment – occurs that makes it impossible for the filer to complete the Chapter 13 repayment plan, there is the option to convert to a Chapter 7 bankruptcy. Or, the court may allow the filer to discharge the remaining debts due to hardship, or modify the repayment plan.

Another benefit is that a Chapter 13 bankruptcy typically looks more favorable than a Chapter 7, as it shows the individual is at least making an effort to repay his or her debts. Also, Chapter 13 bankruptcies are noted on credit records for only seven years, which is three years fewer than with Chapter 7 filings. And with a Chapter 13 filing, there's no "means test" to pass first.

Individuals hoping to file are, however, required to complete a course of credit counseling by an approved agency before they are allowed to qualify for a Chapter 13 bankruptcy. A bankruptcy attorney will be able to recommend approved agencies. An experienced New Jersey bankruptcy lawyer will be able to offer invaluable counsel and guidance throughout all areas of the complicated bankruptcy filing process.

Source: consumerrecoverynetwork.com, "Pros and Cons of Chapter 13 Bankruptcy", Mrs. Moneyjar, March 1, 2017

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Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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