Attorney Steven N. Taieb of Taieb Law brings well over three decades of legal experience to his bankruptcy practice serving the residents of Camden County, New Jersey. Steven holds the distinction of being one of the few lawyers in the state of New Jersey who is board certified in consumer bankruptcy law by the American Board of Certification. With his knowledge and expertise, Steven helps his clients restart their financial futures by developing customized plans that address the difficulties they face. As a result, he can figure out whether chapter 7 or chapter 13 is the best course of action.
Chapter 7 Bankruptcy
If you find yourself unable to keep up with credit card payments, car loans and mortgage payments, a chapter 7 bankruptcy can help you get rid of some of your debts. Typically, chapter 7 works for people with limited property and income. Chapter suits people who are under the state’s median income or they beat the means test to qualify.
Property in a Chapter 7 Bankruptcy
Chapter 7 is known as a liquidation bankruptcy since property that is not exempt from the proceeding will be sold to settle your debts. Most of our clients who file chapter 7 do not lose property because the property they own is exempt or protected.
There are, however, limits on the value of federal exemptions. Therefore, an individual with a large amount of property will not be totally exempt, and a chapter 7 trustee will sell the non-exempt portion to satisfy creditors.
Prior to filing, it’s important to know if all your property would also be exempt or protected under a chapter 7 bankruptcy in addition to being under the state’s median income.
Your Credit After Chapter 7
There is no doubt that filing for chapter 7 bankruptcy will negatively affect your credit. To begin with, you will lose your credit cards. Although unsecured debts such as credit card balances can be dismissed through a chapter 7 filing, the bankruptcy may remain on your credit report for as long as 10 years. Consequently, your credit scores will take a hit, and it will be essentially impossible to get a mortgage if you don’t already have one.
Furthermore, there are some debts that cannot be discharged through chapter 7, such as student loans, recent tax debt and alimony and child support.
On the other hand, you can start rebuilding your credit shortly after bankruptcy with new lines of credit, albeit at higher interest rates. Furthermore, you can still raise your credit score regardless of whether your credit report still shows the bankruptcy.
Chapter 13 Bankruptcy
A chapter 13 bankruptcy is a reorganization because people who file for chapter 13 usually get to keep most of their property in exchange for agreeing to a repayment plan that settles all or a portion of their debts within three to five years. Chapter 13 makes sense for people whose income is above the state’s median and too high qualify for chapter 7.
Property in a Chapter 13 Bankruptcy
The main benefit of a chapter 13 over chapter 7 is that you to keep valuable property if you successfully fulfill the terms of the chapter 13 repayment plan. For example, a chapter 13 filing means that you can get caught up on an unpaid mortgage, try for a loan modification, or lower your car payment by paying down the loan.
Additional reasons why someone might file chapter 13 instead of chapter 7 is that they have too much disposable income if they no longer have to make large credit card payments, or they stand to lose property in chapter 7 because they have non-exempt property that a chapter 7 trustee would sell.
Your Credit After Filing for Chapter 13
Similar to chapter 7, a chapter 13 bankruptcy will wreak havoc on your credit with the filing remaining on your report for up to 10 years. It will also result in the loss of your credit cards and make it very difficult for you to obtain a mortgage.
Although anyone in this position should weigh the pros and cons of both chapter 7 and chapter 13 bankruptcies, it is important to speak with a qualified bankruptcy lawyer to discuss your options. If you live in Camden County and you need to speak to a bankruptcy attorney near you, Steven Taieb can help you through the process. Whether it is Chapter 7 or Chapter 13, Steven has the knowledge and the expertise to determine what is right for your situation. He not only advises his clients on how to deal with their debt responsibly, but he also puts them on a path towards a healthier, bankruptcy-free financial future.