Is bankruptcy a possible solution to your financial woes?

| Dec 4, 2019 | Firm News |

You’d likely have a difficult time finding an adult in New Jersey (or any other state) who has not, at some time in his or her life, experienced financial problems. If you currently count yourself among those who have seen better days regarding finances, you might be feeling a bit anxious or stressed as you enter the holiday season. It’s helpful to keep in mind that most financial problems are not permanent.

The key to finding a strong solution is to first understand the underlying cause of your financial crisis and learn as much as you can about any and all viable options that are available to help you get things back on track. You might be surprised to learn that a solution is easier to obtain that you initially thought.

Possible solutions to restore financial stability

There are several types of bankruptcy that many New Jersey residents have accessed in the past to overcome even the most complex financial crises. Chapter 13, Chapter 11 and Chapter 7 bankruptcies are each unique but also similar in some ways, the main one being that each can be a valuable financial tool to obtain debt relief and lay the groundwork for a stronger financial future.

It’s possible to be eligible for one type of bankruptcy but not another. That’s why it’s important to thoroughly research bankruptcy laws and to make sure you understand the requirements you must satisfy under each chapter before filing a petition.

What are the differences between types?

Chapter 7 bankruptcy typically involves a complete liquidation of assets. If you go this route, you will sell your assets and use the proceeds to pay back your lenders the debts you currently owe. Chapter 13, on the other hand, often allows you to retain certain assets, such as your home or vehicle, while you navigate a repayment plan that your lender has agreed to accept.

It is typically business owners who choose Chapter 11 bankruptcy as a means of obtaining immediate debt relief. This type of bankruptcy might provide a way for you to stay in business by either reducing your debt or extending your time for payments.

Current income is a key factor

If you’re trying to decide whether to file for Chapter 7 or Chapter 13 bankruptcy, it’s helpful to consider your current earnings. To qualify for Chapter 7, you’ll have to pass a means test that compares your income to the median income in New Jersey. If you’re at or below that number, you might qualify.

Chapter 13 is known as the worker’s bankruptcy because you must earn a certain amount of income to qualify. This is because you must prove that you have a legitimate means for continuing to make payments to satisfy your debt.

Bankruptcy may help accomplish your ultimate goals

It’s understandable that you might feel stressed or frustrated because of a current financial crisis in your life. It’s helpful to try to think of the big picture and your future financial well-being instead of only the current problem you face. You may have options available that can not only help you resolve your immediate financial needs but also pave the way to restored financial stability down the line.