Filing for bankruptcy has several consequences. But, while bankruptcy is often perceived negatively, the reality is that many of the consequences of filing for bankruptcy are positive—especially in the long term. If you are thinking about filing under Chapter 7 or Chapter 13, here are some important considerations to keep in mind from our New Jersey bankruptcy attorneys:
1. If You File Under Chapter 7, Many of Your Debts Will Be Discharged
When you file for bankruptcy under Chapter 7, your eligible debts are discharged. This means that you no longer have any obligation to pay. Generally speaking, this applies to your unsecured debts (i.e. credit cards, medical bills and utilities). Certain debts, such as student loans, alimony, child support, and federal tax obligations, are not eligible to be discharged in a Chapter 7 bankruptcy.
2. If Your File Under Chapter 13, Your Eligible Debts Will Be “Reorganized”
A Chapter 13 bankruptcy is also commonly known as a “reorganization” bankruptcy. This is because, unlike filing under Chapter 7, filing under Chapter 13 does not result in the immediate discharge of your eligible debts. Instead, you will workout a play to make manageable payments over time; and, once you complete your court-approved payment plan, then any remaining amounts that you owe will be discharged.
3. Filing for Bankruptcy Stops Creditor Harassment
Once you file for bankruptcy, your creditors must stop contacting you about payment, and they will also be prohibited from levying your property or garnishing your wages. If you are facing foreclosure of your home or repossession of your vehicles, filing for bankruptcy can protect these assets as well.
4. When You File for Bankruptcy, You Will (Probably) Still Have Some Debts
Not all debts are eligible for discharge in bankruptcy, and there are debts that you can keep even if you file under Chapter 7. In particular, as long as you can make your mortgage and auto loan payments once your unsecured debts have been discharged, you can keep your home and vehicles even after you file for bankruptcy.
5. Your Financial Situation Will Begin to Improve
In general terms, the point of filing for bankruptcy is to reestablish your financial footing; and, for many people, this begins to happen almost immediately. While it is true that your bankruptcy will show up on your credit report for seven to 10 years, if you already had bad credit because you were not paying your bills, you could see your credit score start to rise right away.
Of course, there are many more consequences of filing for bankruptcy as well, and the specific impacts for you will depend on your personal financial circumstances. If you have questions and would like to speak with a New Jersey bankruptcy attorney, we encourage you to contact us for a confidential initial consultation.
Talk to a Lawyer about Filing for Bankruptcy Under Chapter 7 or Chapter 13
Do you have questions about filing for bankruptcy in New Jersey? To discuss your options with an experienced attorney in confidence, call us at 877-435-6371 or tell us how we can help online today.