New Jersey’s economic landscape remains in a state of flux — mostly thanks to Super Storm Sandy and the crash of the housing market. Hard working residents struggle every day just to keep their heads above water. Filing for either Chapter 7 or Chapter 13 bankruptcy may be the best option for many of these individuals.
Whether a New Jersey resident files Chapter 7 or Chapter 13 — which are the most common types of personal bankruptcy filings — is not necessarily up to the filer. A “means test” is performed to determine which type of bankruptcy for which an individual may be qualified. The income thresholds vary from state to state, based on several factors.
In every state, if a filer has a steady income and is makes more money than is allowed for filing Chapter 7, he or she may be entitled to file Chapter 13. At the same time, there is also a maximum amount of debt a person can have in order to file this type of bankruptcy. If qualified, a debt repayment plan is created by the filer to pay all or part of the individual’s debts over the course of three to five years.
In a Chapter 7, many of a person’s debts can be discharged, which means that the filer is no longer obligated to pay them. Any assets that are not exempt by law may be sold by the trustee to pay debts. Most cases take between four and six months.
During the process, a stay is in place to keep creditors at bay, which relieves the stress that many individuals feel when facing overwhelming debt. Both types of bankruptcy give filers the time and space to deal with their financial situations. Once complete, it is possible to start fresh and achieve financial stability once again.
Source: Fox News, “Using personal bankruptcy to hit the reset button on distressed properties“, Robert Massi, Aug. 27, 2015