There are several pros and cons to filing bankruptcy. First, there is a negative connotation to the word. Nonetheless, filing can delay or halt foreclosures and repossessions. A lot of people are deep in debt. In fact, about a million bankruptcy petitions were filed last year. Unfortunately, bankruptcy may be the only option for some as bank loans and personal loans are usually not options. Speak with a bankruptcy attorney in Wanaque, NJ to learn more about filing.
Chapter 7 and chapter 13 are the two most popular consumer bankruptcies. Indeed, 70 percent of all bankruptcies are chapter 7. Anyone who files chapter 7 must prove they cannot afford to repay their debt. Instead, the bankruptcy trustee liquidates available assets to repay creditors. The attorney will explain which assets are exempt from liquidation. Debtors typically are allowed to keep home equity and up to $2,575 equity in a car. The amounts double for married filers.
On the other hand, chapter 13 filers agree to repay debts over a three-to-five year period. Therefore, filers must have a regular source of income. The bankruptcy trustee looks at the filer’s income and debts to come up with a payment amount. The bankruptcy attorney in Wanaque, NJ can object to the amount, which is the most difficult aspect of a chapter 13. Filers must also pay the current bills. If this is done successfully, the filer ends up with no debts, a house and a car. Unfortunately, not all filers budget their spending to make the payments. The result may be dismissal of the bankruptcy.
On the downside, bankruptcy will not clear up certain debts including child support, alimony, some college loans and tax arrears. Further, bankruptcy cannot discharge debts owed due to injury-related lawsuits. Many people think the credit reporting aspect is negative. Chapter 7 stays on the credit report for 10 years, and chapter 13 for 7 years. However, it can be argued that people who are in debt have low credit scores anyway. Debts can pile up in an uncertain economy and bankruptcy offers the opportunity to start over. If you do file, learn to budget to avoid getting in debt again.