When it comes to personal financial struggles, everyone is different. This is why there are so many different bankruptcy Chapters. Each bankruptcy Chapter is designed with certain situations and financial scenarios in mind and is tailored to help specific groups of people.
Chapter 7 bankruptcy is often referred to as liquidation because it essentially uses a debtor’s material assets to help pay off the debts that they acquired. Since the bankruptcy Chapter involves no repayment plan, it can be completed in a matter of months, and debts that are not repaid through the liquidation of assets are often discharged. This is why Chapter 7 bankruptcy is such a common choice for many. However, this does not mean that filing for Chapter 7 bankruptcy is right for everyone. The bankruptcy filing is only available under certain circumstances, and will only be optimal for certain people.
You must have a relatively low income in comparison to your debts
In order to be eligible to file for Chapter 7 bankruptcy, you must first pass a means test. This test takes into account your income, your expenses and your debts. Only those who would struggle to pay back their debts through Chapter 13 bankruptcy will be eligible to file.
You should not have filed for bankruptcy recently
The bankruptcy courts do not want people to get into a cycle of bankruptcy and debt. Therefore, it will not be possible to file for Chapter 7 bankruptcy if you have filed for Chapter 13 in the past six years or Chapter 7 in the past eight years.
You may have a small business
Many people who file for Chapter 7 bankruptcy are small business owners who are dealing with extensive business debts that are assigned to the business owner individually. Small business owners who are adversely affected by personal liability may benefit greatly from Chapter 7 bankruptcy, especially because they will likely not be subject to a means test if they have more business debt than personal debt.
If you are worried about how you will be able to effectively pay off your debts in New Jersey, it is important that you look into the pros and cons of all bankruptcy filing options.