Determining Whether Bankruptcy is the Best Option

The Factors to Consider before Pursuing Bankruptcy Protection

You’ve been struggling to meet your financial obligations, perhaps as a consequence of a serious illness or injury, or maybe due to the loss of a job. You’ve always been able to work through any financial difficulties before, but this time there seem to be few options other than bankruptcy. How do you know if seeking protection through Chapter 7 or Chapter 13 is the right thing to do? Let’s look at some of the factors that go into a decision whether to file for bankruptcy protection.

Do You Have the Resources to Pay Your Creditors Over Time?

This will help you determine whether you can permanently discharge debts or must seek to establish new payment arrangements with your creditors. You will need to submit to a “means test,” which compares your income and resources with others in your state. If you don’t have the resources to repay creditors over a three-to-five year period, you’ll typically be able to rid yourself of certain obligations.

What Are Your Most Significant Debts?

While many debts can be discharged in bankruptcy, some cannot and some are extremely difficult to extinguish. Obligations for child or spousal support are generally excluded from discharge, while student loan debt and many tax obligations may only be discharged under limited circumstances.

What Type of Property Do You Own and How Much Do You Want to Keep?

When you file for protection under Chapter 7, you must relinquish unprotected assets to the bankruptcy court in exchange for the right to discharge debt. You can protect some assets in New Jersey, but there are strict limits. When you file a Chapter 13 bankruptcy, though, you typically get to keep your property.

Contact Attorney Howard N. Sobel

At the Law Office of Howard N. Sobel, we provide personal bankruptcy counsel to men and women throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

Named a New Jersey SuperLawyer Every Year since 2008, Including 2023