For many debtors, a Chapter 7 liquidation is highly attractive, allowing you to permanently discharge certain debts. However, under current bankruptcy law, you must qualify to file under Chapter 7 by first showing that you lack the means to repay your creditors over a three-to-five-year period. In addition, there’s a trade-off for the right to permanently rid yourself of certain debts—you have to transfer “non-exempt” assets to the bankruptcy court. Both state and federal rules let you keep some equity in a home and a car, and both place a dollar limit on the value of personal property you can retain. It’s also important to understand that bankruptcy only discharges the debt. If there’s a lien on property, the creditor can still enforce the lien and take the property back if you fail to keep the secured obligation current.
With a Chapter 13, you are essentially working to restructure and renegotiate the terms of repayment to your creditors and spread out your obligations over a three-to-five-year period. You won’t have to transfer any of your property to the bankruptcy court, and your creditors won’t have any access to it either, unless you fail to honor your agreements under the reorganization plan.
At the office of Howard N. Sobel, we work closely with people in New Jersey in personal bankruptcy filings. Contact our office online or call us at 856-424-6400 to set up a free initial consultation (on selected cases). We are currently available by phone, text message, or videoconference only. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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