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Chapter 7 Bankruptcy—The Basics

What Is a Chapter 7 Bankruptcy Filing? How Do You Qualify?

Chapter 7 Bankruptcy—The BasicsWhen you’re struggling to meet your financial obligations, whether you’ve lost your job, suffered a serious injury, been through a divorce or encountered other unexpected expenses, a bankruptcy filing can help you get back on your feet. That’s why the laws are there—to give people a fresh start when circumstances become overwhelming.

If you’ve considered bankruptcy as an option, you may know that there are options, most commonly under Chapter 7 and Chapter 13. You may not fully understand the differences, though. Here’s an overview of the liquidation process in Chapter 7, to help you decide whether bankruptcy is right for you and which approach you should consider.

In a Chapter 7 proceeding, you can have certain debts permanently discharged. That means that your creditors can never compel you to repay the debts in the future, and they can’t harass you with phone calls, letter or legal action. In exchange for the right to discharge debts, you must make certain property available to the bankruptcy court and the trustee. That property may then be sold to satisfy your creditors.

Certain debts cannot be discharged, including child support and alimony arrearages, most tax debts and student loan payments. You also have the right to claim exemption of certain property, including equity in a residence or vehicle and some personal property. There are exemptions available under federal and state laws. You may choose one or the other, but not both.

Pursuant to the bankruptcy reforms of 2005, you must submit to a means test to determine whether you qualify to discharge debts in Chapter 7. If you don’t meet the criteria set forth in the means test, your only option for personal bankruptcy will be under Chapter 13.

Contact the Law Offices of Howard N. Sobel

Protect your rights in a consumer bankruptcy filing in New Jersey. For professional and knowledgeable legal counsel with a personal touch, contact our office by e-mail or call us at 856-424-6400 to see if you qualify for a free initial consultation. We are available evenings and weekends upon request.

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