Are you strung out on your debts and unable to make even the minimum payments? If so, you may be contemplating filing for bankruptcy.
It can be confusing to know which type of bankruptcy is right for you. Below are some basic facts about filing for personal bankruptcy.
- Chapter 7 wipes out most of your debts. Those with much debt but little income will qualify for Chapter 7 bankruptcy in most cases because it is means-based.
- Alternatively, filing under Chapter 13 is often preferable because there is no means test to pass or asset seizure. Instead, filers draft repayment plans to pay down their debts over three or five years.
- A bankruptcy filing can halt your creditors’ collection efforts as well as foreclosures. If saving your home is your primary goal, Chapter 13 is the way to go.
There are a lot of misconceptions about filing for bankruptcy. While there is an asset seizure with Chapter 7, many assets are exempt from seizure and sale. In Chapter 13, there is no asset seizure at all.
There are downsides to filing for bankruptcy. For one, your credit gets dinged, although it’s likely not been in good shape for a while if you’re considering filing. Also, it’s public information that anyone can access.
Determining which type of bankruptcy is right for you is imperative before filing. While it is possible to convert one type to another, it is more expensive to do so. It makes sense to get it right the first time.
Talking to a New Jersey personal bankruptcy attorney can clarify your options and show you a path out of your unmanageable debt.