For over the past three decades, Steven N. Taieb of Taieb Law has handled bankruptcy cases for residents of Gloucester County, New Jersey. As 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, Steven helps clients manage their financial difficulties. Regardless of whether it is chapter 7 or chapter 13, Steven’s vast experience and knowledge helps his clients determine the best way to reset their finances and get their lives back on track.
Chapter 7 Bankruptcy
Filing for chapter 7 is a solution for people who have fallen behind in their debts and have no foreseeable way to pay them back. If someone is drowning in car loans, credit card payments and a mortgage, a chapter 7 bankruptcy is a way to discharge most of those debts. Chapter 7 works for people who have minimal property and are below the median income, or they beat the means test to qualify.
Your Credit After Filing Chapter 7
While unsecured debt such as credit card balances can be dismissed through a chapter 7 filing, you will lose your credit cards and the bankruptcy may remain on your credit report for as long as 10 years. As a result, your credit score will take a serious hit, and it will be very difficult to get a home mortgage if you don’t already have one. This is the case whether you file for chapter 7 or for chapter 13.
In addition, there are also some debts that cannot be eliminated through chapter 7 such as student loans, recent tax obligations, and alimony and child support.
Fortunately, it is possible to repair your credit shortly after bankruptcy with new lines of credit, albeit at higher interest rates. And it is always possible to raise your credit score regardless of whether your credit report still shows the bankruptcy.
Your Property After Filing Chapter 7
Chapter 7 is considered a liquidation because any property deemed non-exempt by the court 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.
However, there are limits to the value of exemptions as stipulated by congress. Consequently, someone with a large amount of property will not be exempt, and a chapter 7 trustee will sell the non-exempt portion to satisfy creditors.
In addition to being under the state’s median income, it’s critical to know whether all of your property would also be exempt or protected under a chapter 7 bankruptcy.
Chapter 13 Bankruptcy
A chapter 13 bankruptcy is basically a reorganization because it allows an individual to keep some of their property as long as they adhere to a repayment plan that settles all or a portion of their debts within three to five years. Chapter 13 is a logical step for those whose income is too high to qualify for chapter 7.
Your Property After Filing Chapter 13
One of the biggest benefits of filing for chapter 13 instead of chapter 7 is that it allows one to keep valuable property if he or she successfully fulfills the terms of the chapter 13 repayment plan.
For instance, a chapter 13 bankruptcy enables people to get caught up on their mortgage payments, pay down auto loans to get a lower payment, or try for a loan modification. It is also possible to sell some property to pay off debt.
An additional reason 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.
While it’s helpful to do as much research as possible if you are considering bankruptcy, it’s critical to speak with a knowledgeable bankruptcy attorney to understand your options. If you are unsure whether you need to file for chapter 7 or chapter 13, Taieb Law can help you determine the best course of action to handle your debt responsibly. If you live in or near Gloucester County, Steven Taieb can assist with your bankruptcy concerns and get you on the path towards a healthier, bankruptcy-free, financial future.