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Choosing between Chapter 7 and Chapter 13 bankruptcy

If you have been having financial difficulties, you have most likely been feeling fear, uncertainty and even shame. At a certain point, it seems like the problem has gotten so bad that you can't see a way out of it and are faced with an overwhelming amount of stress and questions you can't answer. It doesn't have to be that way. The truth is that many Americans have found themselves with large amounts of debt for a variety of reasons. Whatever the reason, there are options for you and there is a way out of your current situation.

Bankruptcy is a solution for many individuals experiencing financial straits to get back on track. Usually, the most common questions when initially considering bankruptcy are, "Am I eligible for bankruptcy?" and "What type of bankruptcy is the best?" We'll discuss these questions in general, however, it should be noted that the best option for you will be based on your specific circumstances and should be discussed with an experienced bankruptcy attorney to determine which debt relief solution is the best fit.

Am I eligible for bankruptcy?

Anyone is eligible for bankruptcy. It depends on the circumstances in order to determine which type of bankruptcy would be the most beneficial and then eligibility requirements must be considered.

What type of bankruptcy is the best?

The easy answer is that one type of bankruptcy isn't better than the other. However, one type of bankruptcy may be the better fit for you based on your situation. Therefore, it is important to understand the differences between Chapter 7 and Chapter 13, your debt relief needs and your eligibility.

Chapter 7 is also called debt liquidation bankruptcy. It offers a fresh start by discharging unsecured debt (like credit cards) and liquidates or sells secured debt (debt secured by collateral) to pay back creditors. In NJ, a means test must be passed to determine eligibility. This is based on the state median income and calculations combined with your income and expenses. A bankruptcy attorney can help you with the means test calculations and eligibility questions. Chapter 7 is often a good option if you do not have significant assets.

Chapter 13 is also known as a reorganization and repayment plan. It offers you a chance to submit a 3-to-5 year plan to repay your creditors. When the plan is completed, unsecured debt that you have been unable to pay will be discharged. Eligibility requirements are much more lax for Chapter 13; you must have a monthly income and that income must be able to support your payment plan. Chapter 13 is often a good option if you are worried about losing assets like your home or vehicle.

Where do I start?

If you are experiencing financial difficulties and need help, contact East Brunswick bankruptcy attorney Robert C. Nisenson. Life can throw you a curveball that can be difficult to overcome, but it is not impossible. We offer our clients help and not judgment. Call 732-518-8038 to discuss your situation and your options. We will help determine the best debt relief solution for you based on your circumstances and get you on the road to financial recovery.

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