When your finances become overwhelming to the point where you see no reasonable way to dig yourself out of debt, you may start considering filing for bankruptcy. Depending on the specifics of your situation, filing for bankruptcy may be the fastest way to put an end to creditor harassment and give yourself a strong shot at a fresh financial start.
Per U.S. News and World Report, when you file for consumer bankruptcy in New Jersey, you are likely to file for either Chapter 7 or Chapter 13. Both options give you a possible way to get back on your feet financially. However, they differ from one another in several important ways.
What to know about Chapter 7 bankruptcy
A Chapter 7 bankruptcy may suit your needs if you have limited means or income. You have to pass a means test before filing for Chapter 7. If you have too much money at your disposal, you are unlikely to qualify. This type of bankruptcy filing might require you to relinquish some of your assets to pay back creditors.
What to know about Chapter 13 bankruptcy
Chapter 13 bankruptcies may be worth considering if you have regular income and do not want to risk having to turn over your house, car or other valuables. With a Chapter 13 bankruptcy, you typically reorganize your debts so you are able to make payments on them over time. If you make your payments in full and on time, you should not have to lose your house or other assets.
There are other important differences between Chapter 7 and Chapter 13 bankruptcies, including how long they take to discharge your debts.