Losing control over your finances may have you looking for potential solutions, and you may be considering filing a New Jersey bankruptcy case. Chapter 7 and Chapter 13 bankruptcies both help individuals whose personal finances have spiraled out of control. However, they involve different processes and have different qualification requirements.
According to Quicken Loans, understanding the nuances that exist between Chapter 7 and Chapter 13 bankruptcies should help you make an educated decision about whether one type might better suit your needs.
Chapter 7 bankruptcies
Chapter 7 bankruptcies are available only to those with limited incomes. To qualify, you have to pass a means test showing that you do not have enough income available to realistically pay back your creditors what you owe them. If you move forward with this type of filing, you may have to turn over your home and other assets. However, this is not a given.
Chapter 13 bankruptcies
If you fail to qualify for a Chapter 7 bankruptcy or have at least some money to put toward your debts, you may want to consider a Chapter 13 bankruptcy filing. You may typically keep your home and other assets when you file for Chapter 13. However, you must stick to the terms of your payback plan and keep up with your mortgage payments to do so.
It is also worth noting that Chapter 7 and Chapter 13 bankruptcies take different lengths of time to complete. A Chapter 7 case usually takes between about three and five months to complete, whereas a Chapter 13 case may take between three and five years to finalize.