Chapter 7 v. Chapter 13
You may be wondering whether a chapter 7 or a chapter 13 bankruptcy is the right option for you. A chapter 7 is a liquidation bankruptcy where most debts are discharged and you never have to repay them. A chapter 13 is a reorganization bankruptcy where you must repay the debts (or a reduced amount) over a 3 to 5 year period.
It is obviously better to eliminate the debt than have to enter into a repayment plan. We must, however, determine whether you qualify for a chapter 7 or a chapter 13. Generally, if you have assets which are exempt under federal or state exemptions and little or no money left at the end of the month (no disposable income), you should file a chapter 7 bankruptcy. If you have significant assets that cannot be exempted and you have excess income at the end of the month, you should file a chapter 13 bankruptcy. New Jersey allows individuals to choose between the federal exemptions and the local New Jersey exemptions.
To determine whether you qualify for a chapter 7 or a chapter 13, contact us for a free consultation.
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