New Jersey Bankruptcy Law Blog

Chapter 7 versus Chapter 13: What's the difference?

If things haven't been going so well financially for you, you may feel as though you're swimming upstream. The good news is that most financial problems are resolvable. The key to finding a viable solution often lies in knowing what options are available and who can help you to lay out a plan that resolves debt issues and gets things back on track. Whether your money problems occurred over time or came about suddenly due to an unexpected circumstance, you can be proactive in exploring options to find a solution. 

Several factors can cause added stress, such as possible foreclosure on your home, creditors hounding you or other extenuating circumstances. What works for one person may not be the best solution for another. This is why it often helps to rely on experienced guidance. Many New Jersey residents choose to file for Chapter 7 or Chapter 13 bankruptcy in similar situations as the one you're now facing. If you think that's an option in your case, it's critical that you understand the differences between these two types of debt relief. 

Is credit counseling required before filing bankruptcy?

You are not alone if you are thinking of filing for bankruptcy in New Jersey. Making the decision to file is a huge step. It has far-reaching consequences for your finances and is not a decision to make lightly. The government has put safeguards into the process to help ensure you are making the right choice and that bankruptcy is the best for your situation. One of those safeguards, according to the United States Bankruptcy District, is the pre-filing credit counseling requirement. 

You must complete an approved credit counseling course before you file with the bankruptcy court. After completing the course, you are given a certificate that must go with your paperwork when filing. If you do not complete the counseling before filing, then your case will be dismissed. This is a requirement set under the Bankruptcy Abuse and Consumer Protection Act of 2005. 

How do I deal with my creditors?

If your phone is ringing nonstop and you are tired of having to silence it, it might be time for you to stop hiding, answer it and deal with your creditors. Though you might not believe you can do so without making things worse, there is a wrong and right way to deal with them to keep things from getting worse.

Arm yourself with knowledge about your rights. Do some research to learn what they are and consult with an attorney if you need further clarification. The Fair Debt Collections Practices Act details what creditors can and cannot lawfully do, states Nerdwallet. 

Can reorganization save your business from bankruptcy?

You have worked hard to take your New Jersey company from a simple business idea to a well-known brand that is respected and sought-after by enthusiastic consumers. However, you are realizing that maintaining that type of success can be hard to come by with a fluctuating economy and changes in the demand for your product. Now that your company is struggling financially, you may be wondering if there are any options that can help save your organization from having to file for bankruptcy. 

Consider reorganizing your business. Initially, this idea may seem a bit daunting and even impossible. However, according to, by altering your vision and creating a realistic plan to achieve your goals, you have the ability to make your business even stronger and more resilient. Some of the things you can do include the following:

  • Negotiate your debt: It is never a bad idea to work with your creditors to consolidate your debt and renegotiate payment terms. 
  • Analyze your distribution: Take a closer look at how you are distributing your product. If you are charging too much more than competitors, you may only be hurting yourself. 
  • Consider pay cuts: Reduce the money you are spending on your workforce.  This may mean a decent pay cut for some of your employees but try to be forthright in explaining why.
  • Stop worrying, start planning: Rather than spend all of your time worrying about your future, be proactive in creating a plan for what changes need to be made to get your company back on its feet. 

Understanding what happens when your car is repossessed

Despite your best efforts to continue making car payments on your vehicle, you are unable to meet the required expectations and your car is repossessed by the loaner. Now, you are left trying to figure out where to go from here and what steps come next. At Goldman & Beslow, LLC, we have helped many people in New Jersey to work their way through challenging financial disruptions. 

Just because your car has been repossessed does not mean you are required to forfeit all of your personal belongings. It also does not mean you are completely unable to negotiate an agreement. According to the Federal Trade Commission, your creditor has limited rights even though they have been able to legally take back your vehicle. One of the first things you should do once your vehicle has been repossessed, is to refer back to your original contract with your lender. Make sure that you understand what constitutes a default and clarify that you have indeed been in breach of contract. 

How do I know when it is time to file for bankruptcy?

If creditors are calling your phone nonstop and your mailbox is full of bills, there is no doubt that you probably feel stressed and frustrated by your financial situation. It is not that you do not want to pay your debts. You cannot give them money you do not have. Before you throw in the towel and file for bankruptcy, consider the following information first. 

Many East Orange area residents are unable to pay their bills because of job loss, a decrease in income, financial emergencies and unexpected expenses. According to USA Today, the “main reason for personal bankruptcy filings is medical debt.” It is not necessary for you to wait until your home is in danger of foreclosure to start assessing your situation to determine if it is time for you to file for bankruptcy. The following indicators could mean it is time for you to speak with a bankruptcy attorney for guidance. 

  • taking out payday loans and cash advances
  • considering debt consolidation
  • relying on credit cards to get by
  • can barely afford the minimum payments on bills
  • not able to repay debts within a reasonable period 

What is a Chapter 11 bankruptcy?

If you own a New Jersey business that is failing due to too much debt and not enough profit, you and it may be a candidate for a Chapter 11 small business bankruptcy. As FindLaw explains, you qualify if you employ no more than 500 people and your business has less than $2.19 million in debt.

Somewhat similar to a Chapter 13 personal bankruptcy, the purpose of a Chapter 11 is not to discharge your company’s debts, but rather to make your business profitable once again. It gives you the opportunity to renegotiate your company’s contracts, leases, etc. on more favorable terms, thereby reducing the amount of outstanding debt for which your business is liable.

Release from every debt is not always possible

If you're among many in New Jersey who have been wading through some rough financial waters, you may be trying to focus on the future, more specifically, what options are available to help you rebuild your finances and restore financial stability in the weeks and months ahead. If you also happen to be among those who determined that bankruptcy is the most viable option to secure immediate debt relief and pave the way toward a healthier financial future, you might be wondering about dischargeable versus non-dischargeable debt.  

It's critical that you understand the difference because it may affect which type of bankruptcy you choose. Knowing that you want to make as informed of a decision as possible, it may help to speak to someone who is well versed in the bankruptcy process.  

What mistakes should I avoid when filing for bankruptcy?

If you feel as if you have hit rock bottom and are so deep in debt that you cannot dig your way out, you might be thinking about filing for bankruptcy. Many people in the East Orange area fall on hard times and rely on bankruptcy to give them a fresh financial start. As tempting as it may seem for you to rush and submit your petition to the courts, you do not want to make mistakes. 

Bad financial habits in the weeks and months before you file your paperwork for bankruptcy can have an impact on your case. Review the following list of mistakes to avoid so you can improve the outcome of your financial situation. 

What are the basic filing fees for Chapter 7 and Chapter 13?

If you have reached the point that you cannot afford your expenses and have mountains of debt continuing to pile up, you may feel as if you have no way out. You may consider bankruptcy, but you may have concerns regarding the costs associated with filing a petition and completing the bankruptcy process.

True, Chapter 7 and Chapter 13 bankruptcy both come with filing fees and other expenses. Therefore, you may think that because of your already existing financial troubles that this debt relief method also remains out of reach. However, gaining more information on filing fees and ways to pay may help you realize that bankruptcy could still be a viable option for you.

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