Bankruptcy can wipe out your unsecured debts so you can start over.

How does the bankruptcy process work?

Most consumers file under either Chapter 13 or Chapter 7 bankruptcy. If you file under Chapter 13, you’ll commit to a court-approved payment plan for 3 to 5 years. The court will look at your income and compare it to state and national standards for expenses. The difference between your income and those expenses is called “disposable income.” You’ll pay your disposable income every month to the bankruptcy trustee, who will distribute it to your creditors.

If you file under Chapter 7, you’ll split up your assets into exempt and nonexempt groups. New Jersey and federal law offer substantial exemptions and most debtors have no nonexempt property. If you do have some nonexempt property, the bankruptcy trustee will sell it and use the proceeds to pay your creditors.

Secured Debts

There are two types of debt: secured and unsecured. Secured debt is linked to a specific piece of property, such as your auto loan or your mortgage loan. In bankruptcy, you’ll need to decide whether to keep making payments on your secured debt and keep that property. If you choose not to make payments, you can surrender the property.

Medical, Credit Card, and Judgment Debts

Most people who file for bankruptcy are struggling with unsecured debts. These include medical bills, credit card debt, and collection judgments. These debts aren’t linked to any specific property. Bankruptcy is designed to address this type of debt. When you finish the Chapter 13 payment plan, you’ll receive a bankruptcy “discharge” for the remainder of your unsecured debts. When your debts are discharged, they are forgiven and you no longer have any obligation to pay. Under Chapter 7, you’ll receive a discharge for your remaining unsecured debts after any nonexempt property is sold.

We Can Help – Contact Us Today

The bankruptcy process and the rules that govern it are complex. Our South Jersey bankruptcy lawyers have decades of experience in the bankruptcy courts and we can make the process easy for you. Come in today for a free consultation to discuss your debts, your unique situation, and your financial goals. We’ll work with you to determine whether bankruptcy is the right option for you. We understand the pain of dealing with crippling debt and we want to help you get a fresh financial start.

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