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Which is better: Chapter 7 or Chapter 13 bankruptcy?

Most people are aware that there are multiple types of bankruptcy that can be used to help them get out of a financial crisis, but they do not know the differences or how they work. If you are considering filing for bankruptcy, it is important that you understand all processes so that you can decide which chapter will be the most beneficial to your situation.

Chapter 7 bankruptcy is commonly referred to as “clean slate” bankruptcy. This is because debts are wiped clean due to the liquidation of assets that are nonexempt from the process. In most cases, the one who filed for Chapter 7 bankruptcy does not lose all of their possessions. Common assets such as vehicles and some home equity are exempt. Some hold only assets that are exempt, so they do not pay anything to creditors.

After payment has been issued, the filer is no longer liable for the debts that were once accrued.


To qualify for Chapter 7 bankruptcy, you must show that you live below a certain level of means, varying by state.

Those who cannot file for Chapter 7 bankruptcy often turn to Chapter 13 bankruptcy. This is for those who have the means to repay their debts, though they are experiencing a financial crisis. A repayment plan is issued which allows them to keep the assets that they own.

In short, there is no “better” chapter to turn to when filing for bankruptcy. Both have their advantages and disadvantages, and it is all about which you qualify to use. If you have additional questions about bankruptcy, speaking to an experienced attorney could be beneficial to your situation.

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.