Should I file for Chapter 7 or Chapter 13 bankruptcy?

When people are faced with financial troubles, they should consider filing for bankruptcy. Although bankruptcy may sound like you are accepting defeat, this is not true. There is a negative stigma surrounding bankruptcy but it can be a useful tool in rebuilding your financial future. Bankruptcy can be a way for individuals to get a fresh start and to improve their situation.

Individuals should consider two options for bankruptcy: Chapter 7 and Chapter 13. With these two options, you could be presented with the opportunity to get your finances in order. Through these options, individuals will be able to prepare a financial plan to help their current situation.

How is Chapter 7 bankruptcy handled?

To file for bankruptcy, people have to be eligible. Before filing, individuals have to go through credit counseling and attend a debtor education course to better prepare themselves. After that is done, they must pass a means test, which compares their income to the median income in the United States. In order to be eligible to claim bankruptcy, their income has to be below the median income.

If you have completed the necessary eligibility demands, a petition for bankruptcy must be filled out. In this petition, you will be required to list certain aspects. You have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets. When the paperwork is completed, an automatic stay goes into effect immediately.

An automatic stay bars creditors from contacting you about your debt. This can ease some stress about your financial situation and eliminate harassment from creditors. With this aid, you will be able to focus on preparing a financial plan instead of resisting creditors.

How is Chapter 13 bankruptcy handled?

The process of filing for Chapter 13 bankruptcy is similar to that of Chapter 7 bankruptcy. Before filing, you will need to undergo credit counseling 180 days before you file. If you previously filed a petition that was dismissed in the 180 days, you cannot file. Once you file for bankruptcy, you should file documents that include a list of liabilities, assets and property, a statement of financial affairs, a list of executory contracts and unexpired leases, proof of credit counseling and any plan developed to handle the matter, income payments within 60 days prior to filing, monthly net income and any indication of a rise in income or expenditures and interests the debtor has in state or federally-qualified education or tuition accounts.

When the paperwork is officially filed, the automatic stay will go into effect to give you the space you need from creditors. This can be seen as one of the most beneficial parts of filing for bankruptcy since you will not have to face harassment from creditors any longer.

Detzky, Hunter & DeFillippo, LLC is an experienced law firm that has proudly served clients across New Jersey for decades from their convenient locations in Freehold and Somerville. If you need strong legal guidance, contact us today to schedule a consultation. We are lawyers who listen, counselors who care.

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