CHAPTER 7 & CHAPTER 13 BANKRUPTCY

The overwhelming majority of consumer bankruptcy cases filed nationwide are either under Chapter 7 or Chapter 13. The most essential difference between these two types of cases are that in a Chapter 7 case there is no repayment plan to creditors proposed, while in a Chapter 13 case, the Debtor proposes a repayment plan over a term of 3 to 5 years, generally without interest, and which plan is subject to confirmation by the Bankruptcy Court.

There are many misconceptions regarding how a bankruptcy proceeding affects you, your property and your credit score. An example of which is the often misused term that a Chapter 7 case is a “liquidation” case, when in reality all of the Chapter 7 cases that our firm has filed over the past thirty years, have allowed debtors to keep all of their assets that fall under the exemptions allowed by the Bankruptcy Code or New Jersey Statutes. The fear of bankruptcy often stems from a misconception that you will never be able to obtain credit after filing, when in reality, the majority of debtors that file Chapter 7 cases are in fact able to obtain credit in the form of car loans, mortgages, personal loans and the like at a reasonable time after receiving a discharge.

While a Chapter 13 bankruptcy case requires debtors to propose a plan to partially repay some of its debts which may seem unappealing, it does provide distinct advantages that a Chapter 7 does not. If you are falling behind on your mortgage payments, car loans or have significant tax debt and wish to keep your property, a Chapter 13 offers you the unique ability to do so by proposing a plan to stretch the outstanding payments due your creditors over a three to five year term, generally without interest.