When it comes to filing for bankruptcy, there are two common options to choose from: Chapter 7 or Chapter 13. Chapter 7 bankruptcy is considered a liquidation bankruptcy. It makes it so most of your unsecured debts, like medical bills and credit card debt, are wiped out, without the requirement to pay back balances with a repayment plan. Chapter 13 bankruptcy is considered a reorganization bankruptcy. Those who make too much money to qualify for Chapter 7 can file for Chapter 13, which makes it so you pay a portion of your debts through a repayment plan. The repayment plan typically lasts three to five years. Within these two types of bankruptcy, your debts will be broken down into three categories: secured, unsecured and priority claims. The type of claim a creditor has and the type of bankruptcy you file for will dictate how a debt will be treated.
Understanding your debt and how it is categorized through the different types of bankruptcy makes it easier to decide which type will work for you. Working with an experienced bankruptcy attorney can also help you analyze your debt and assets, and provide you with any and all available options. Filing for bankruptcy is not for everyone, but it can be the thing you need to get achieve debt relief and a fresh financial start. Contact the experienced New Jersey bankruptcy lawyers at the Law Office of Joel Spivack today for a free consultation.
Secured Claims in Bankruptcy in Haddonfield, NJ
The most common types of secured claims are mortgages and car loans, meaning that a creditor has a security interest on that property of yours. While bankruptcy will eliminate your personal liability for the debt, it will not rid of your creditor’s interest. This makes it so they can foreclose or repossess your property (home or car) should you default on it. If you choose to file for Chapter 7 bankruptcy and want to keep your property, you will have to continue to make regular payments on it. You can choose to surrender it back to the creditor and your bankruptcy discharge will wipe out your liability for the deficiency. With Chapter 13 bankruptcy, you could keep your property and pay it off through your repayment plan, or by making direct payments outside of your bankruptcy.
Unsecured Claims in Bankruptcy in Camden, NJ
Claims that are not secured by collateral are considered unsecured claims. These are further categorized as non-priority or priority general unsecured claims. The latter includes debt like personal loans, medical bills, and credit card debt. These are typically dischargeable through bankruptcy. Chapter 7 makes it so non-priority unsecured creditors are the last to get paid if there any assets left over to divvy up. Under Chapter 13 bankruptcy, non-priority unsecured creditors get paid based on your disposable income and nonexempt assets, which typically does not add up to much at all.
Priority Claims in Cherry Hill, NJ
These are non-dischargeable unsecured debts and they get special treatment in bankruptcy. Things like child support, alimony and certain tax obligations are considered priority claims. Under Chapter 7 bankruptcy these debts take priority over general unsecured claims and any remaining debt balance will be there after bankruptcy. Under Chapter 13, these priority claims will be paid in full through your repayment plan. The number of priority claims you have will dictate how much your payment plan is since it is restricted to five years at most.
Contact a Cherry Hill Bankruptcy Attorney for a Consultation About Bankruptcy in New Jersey Today
If you are struggling with debt, you may need a fresh start financially. An experienced bankruptcy and debt relief attorney can help you explore your options and determine the best course of action for you, your family, and/or your business. The experienced New Jersey bankruptcy lawyers at the Law Office of Joel R. Spivack understand the nuances of New Jersey and federal bankruptcy laws, so we can help you protect your interests. Call us anytime at (856) 488-1200 or fill out the online contact form to schedule a confidential consultation. We have an office conveniently located at 1415 Marlton Pike East, Suite 302 , Cherry Hill, NJ 08034.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.