It doesn't take much to throw a proverbial financial train off its tracks. Financial stability is often fragile, dependent on many factors that may fluctuate in negative or positive directions, sometimes without warning. While it's always nice to receive an unexpected financial boom, you may feel quite the opposite if you encounter undue financial strain that you are not prepared to meet. Bankruptcy is often a viable option in situations where other solutions have proved unsuccessful.
There are different types of bankruptcy, however, and it can be challenging to determine which option is best in a particular situation. By doing a bit of research ahead of time, you can gather information to help you seek clarity about New Jersey bankruptcy laws and decide which may be the best path to take to resolve your current financial problems.
Understand the differences
You may have heard about Chapter 7 and Chapter 13 bankruptcies, but do you understand the differences between the two? As with most debt relief solutions, there are eligibility requirements that you must first fulfill in order to apply. The following facts provide additional information that may help you make an informed decision as to how best to proceed to restore your financial stability:
- You may not be able to discharge certain debts under one type of bankruptcy but may be able to under the other. Therefore, it's critical to determine whether you can relieve your particular debts under a specific plan. You may find that Chapter 7 or Chapter 13 a better option according to your particular circumstances.
- If you feel strongly about trying to retain ownership of as many assets as possible, Chapter 13 may be the way to go. With Chapter 7, it is generally necessary to completely liquidate all your assets; the value of which will then convert to payments to satisfy debts.
- In order to qualify for Chapter 13 bankruptcy, you must show proof of sustainable income. If you're currently unemployed or have some money coming in but your income source is not reliable, you may want to look into Chapter 7 bankruptcy, instead.
- If your main goal is to discharge all debt as swiftly as possible to clear the slate and start over, Chapter 7 may be a better option for your case.
- Chapter 13 plans usually restructure and reorganize payments, perhaps over several years' time. This is different from Chapter 7, which is more of an immediate and complete debt relief solution.
The good news is that a temporary financial setback doesn't necessarily mean you will never again enjoy financial stability in life. In fact, many times, solutions are readily available; it's just a matter of knowing they exist and how to access them.
Reaching out for support
Many New Jersey residents would rather rely on experienced debt relief attorneys than try to go it alone when exploring bankruptcy options to help them get their financial feet back on solid ground.