You may be considering filing for Chapter 7 or Chapter 13 bankruptcy if you are struggling with your finances. While both options may provide some relief from your debt and give you a better financial future, it is important to note the ways in which these bankruptcy types differ. Chapter 7 bankruptcy gives New Jersey residents a “clean slate” from most of their debt, while Chapter 13 bankruptcy involves a repayment plan.
There are also qualifying factors that you should know about. Chapter 7 bankruptcy is typically for people who are unable to repay their debt. Having your debt discharged can be a great relief, but you may lose certain assets, which would be liquidated to satisfy creditors before the remainder of your debt is discharged. Therefore, if you wish to keep your home and other assets, and if you have a steady source of income, Chapter 13 may be the better option.
According to the Administrative Office of the U.S. Courts, you must owe no more than $1,184,200 in secured debt and $394,725 in unsecured debt to qualify for Chapter 13, and you must be current in your tax filings. You also must not have had a prior bankruptcy petition dismissed during the previous 180 days for willfully failing to appear in court or to comply with the orders of the bankruptcy court.
Filing for bankruptcy can be life-changing in a positive way, but it is important to understand that this area of law is complicated. Therefore, the information in this post should not replace the advice of a lawyer.
