If you are considering declaring bankruptcy in New Jersey, you need to know the difference between Chapter 7 and Chapter 13 bankruptcies.
Chapter 7 bankruptcy means asking the court to wipe your debts. In doing so, you need to be willing to lose some things. Chapter 13 means asking the court to help you reorganize your debts. In return, you get to keep more of your possessions.
You may not have a choice which you choose. To qualify for Chapter 7, you need to pass a means test. If you earn too much, you will only be allowed a Chapter 13. If you have previously declared bankruptcy, this can affect your choice. You cannot file for Chapter 7 within eight years of a previous bankruptcy, whereas you only have to wait two years to file Chapter 13.
If you choose Chapter 13, you need to adhere to the agreed repayment plan, which usually lasts between three and five years. While the repayment plan may only require you to pay back some of your debt, it can still be too much for many people, with 67 percent of people failing to complete their repayment plan.
Chapter 7 can be a great option if you do not own much, such as houses or cars. It can give you a clean start. However, if you do possess these things, you have to weigh up whether you are prepared to lose them.
If you have questions about bankruptcy in New Jersey, seek legal advice. It is vital to understand the options thoroughly before you commit.
