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Scura, Wigfield, Heyer, Stevens & Cammarota Blog

Should You File a Chapter 7 or 13 Bankruptcy?

[fa icon="clock-o"] May 17, 2016 [fa icon="user"] Scura Law Firm [fa icon="folder-open'] Bankruptcy, Chapter 13, Chapter 7

Chapter-7-or-13-bankruptcyIf your finances are coming apart at the seams and your mailbox, inbox and voicemail are filled with collection notices from your creditors, you may be thinking about filing a bankruptcy. But, like most people, you have never filed a bankruptcy, and you are unsure how the process works and what the difference is between a Chapter 7 and a Chapter 13.

But before you walk into a bankruptcy court in New Jersey, you should make sure you know the difference. While the both can help you obtain a fresh start for your finances, they operate somewhat differently and each has its advantages and disadvantages.

This week, we will examine how a Chapter 7 works and why you might choose this type of bankruptcy to file. Check out our other blog post to find out more about Chapter 13 bankruptcy.

Advantages of a Chapter 7 Bankruptcy

The advantages of a Chapter 7 bankruptcy are speed and comprehensiveness. A Chapter 7 is quick; they average about three to four months to complete. By comparison, a Chapter 13 often takes five years. In addition to speed, the main advantage of a Chapter 7 is the breadth of debt you can discharge.

You can eliminate credit card and other installment loan debt, medical expenses, payday loans and even missing rent payments and utility bills. However, you must keep in mind that most student loans and child support cannot be discharged.

The automatic stay that commences when you file also provides welcome relief from the insistent whine of bill collectors. During the bankruptcy, they must communicate through your attorney.

Eligibility In Filing Chapter 7 Bankruptcy

The one complexity of Chapter 7 bankruptcy is that you must be eligible. If you have too great an income or if you do not pass the "means test" you can always file a Chapter 13. Your bankruptcy attorney can explain these requirements and answer any other questions you may have with Chapter 7.

If you qualify, a Chapter 7 can allow you to quickly begin rebuilding your financial life. 

If you need help getting your Chapter 7 bankruptcy questions answered, contact our New Jersey Bankruptcy Lawyers today to get a FREE consultation.

Source: Ebony.com, "The Different Degrees of Bankruptcy, Explained"

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