Understanding the Two Types of Bankruptcy – Chapter 7 and Chapter 13
May 25, 2023
Understanding The Two Types Of Bankruptcy – Chapter 7 And Chapter 13
For most people, bankruptcy is a word that is associated with financial failure. However, it is important to remember that bankruptcy is a tool that can help individuals and businesses reduce or get rid of their debt. If you are considering filing for bankruptcy, it is important to know the differences between Chapter 7 and Chapter 13 bankruptcy. In this blog post, we will discuss these two types of bankruptcy and help you understand which one might be right for you.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as "liquidation" bankruptcy, is ideal for individuals who want to eliminate all of their unsecured debts, including credit card debts, medical bills and personal loans. When you file for Chapter 7 bankruptcy, a trustee will be appointed to liquidate your assets and use the proceeds to pay off your creditors. However, there are certain exemptions that allow you to keep some of your assets, such as your home, car, and personal belongings.
In order to be eligible for Chapter 7 bankruptcy, you need to pass the means test, which determines whether your income is low enough to qualify for Chapter 7. The means test takes into account your income, expenses, and family size. If your income is too high, you may have to file for Chapter 13 bankruptcy instead.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, on the other hand, is ideal for individuals who are not eligible for Chapter 7 bankruptcy or who want to keep their assets, such as their home or car. Chapter 13 bankruptcy is also known as "reorganization" bankruptcy because it allows you to restructure your debts and create a repayment plan that works for you.
When you file for Chapter 13 bankruptcy, you will have to present a repayment plan to the court. This plan will outline how you will repay your debts over a period of three to five years. During this time, you will make payments to a trustee who will distribute the funds to your creditors. After you complete your repayment plan, any remaining unsecured debts will be discharged.
Who Should File For Chapter 7 Bankruptcy?
If you have a lot of unsecured debt and do not have a lot of assets, Chapter 7 bankruptcy may be a good option for you. You should also consider filing for Chapter 7 bankruptcy if you are struggling to make your monthly payments and are facing the possibility of foreclosure or repossession.
Who Should File For Chapter 13 Bankruptcy?
If you are not eligible for Chapter 7 bankruptcy or want to keep your assets, Chapter 13 bankruptcy may be a good option for you. You should also consider filing for Chapter 13 bankruptcy if you are behind on your mortgage or car payments and want to catch up on these payments over time.
Choosing the right type of bankruptcy can be difficult, but with the help of an experienced bankruptcy attorney, you can make the right decision for your financial future. At Carroll Law Firm, P.C, we have helped many New Jersey residents navigate the complex world of bankruptcy. Whether you decide to file for Chapter 7 or Chapter 13 bankruptcy, our team can provide you with the guidance and support you need to make the process as smooth as possible. Contact us today to schedule a consultation.
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A Guide to Filing for Chapter 7 Bankruptcy in New Jersey
Financial difficulties can be overwhelming, but bankruptcy offers a way to regain control and achieve a fresh start. In New Jersey, the two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Each has its own benefits, requirements, and implications. At Carroll Law Firm, P.C., we specialize in helping clients navigate the complexities of bankruptcy law. Here’s a detailed look at the differences between Chapter 7 and Chapter 13 bankruptcy, and how each can help you achieve financial stability. What is Chapter 7 Bankruptcy? Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows individuals to discharge most of their unsecured debts, such as credit card debt and medical bills. In exchange, the debtor’s non-exempt assets are sold to repay creditors. Advantages of Chapter 7: Quick Process: Chapter 7 bankruptcy typically takes about 3 to 6 months to complete. Debt Discharge: Most unsecured debts are completely discharged, giving you a fresh financial start. No Repayment Plan: Unlike Chapter 13, there is no need to create a repayment plan; the process focuses on liquidating non-exempt assets. Disadvantages of Chapter 7: Asset Liquidation: Non-exempt assets may be sold to repay creditors, which could include valuable property. Impact on Credit: Filing for Chapter 7 bankruptcy will negatively impact your credit score and remain on your credit report for 10 years. Eligibility Requirements: Not everyone qualifies for Chapter 7 bankruptcy. You must pass a means test to demonstrate that your income is below a certain threshold. What is Chapter 13 Bankruptcy? Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows individuals to keep their assets while repaying a portion of their debts over a 3 to 5-year period. This type of bankruptcy is suitable for those with a regular income who can afford to make monthly payments. Advantages of Chapter 13: Asset Protection: You can keep your property, including your home and car, as long as you comply with the repayment plan. Debt Consolidation: Chapter 13 allows you to consolidate your debts into a single monthly payment, making it easier to manage your finances. Stopping Foreclosure: Filing for Chapter 13 can stop foreclosure proceedings and allow you to catch up on missed mortgage payments. Disadvantages of Chapter 13: Longer Process: Chapter 13 involves a 3 to 5-year repayment plan, which is a longer commitment compared to Chapter 7. Regular Income Requirement: You must have a regular income to qualify for Chapter 13, as you need to make consistent monthly payments. Debt Limits: There are limits to the amount of debt you can have to qualify for Chapter 13 bankruptcy. As of 2021, these limits are $419,275 for unsecured debt and $1,257,850 for secured debt. Choosing Between Chapter 7 and Chapter 13: The choice between Chapter 7 and Chapter 13 bankruptcy depends on your specific financial situation and goals. Here are some considerations: Income Level: If your income is below the state median and you pass the means test, Chapter 7 may be the best option. If you have a regular income and can make monthly payments, Chapter 13 might be more suitable. Asset Protection: If you have significant assets that you want to protect, Chapter 13 allows you to keep your property while repaying your debts. Type of Debt: If you have primarily unsecured debts and no substantial assets, Chapter 7 can provide a quicker resolution. If you have secured debts and want to avoid foreclosure or repossession, Chapter 13 can offer better protection. Understanding the differences between Chapter 7 and Chapter 13 bankruptcy is crucial for making an informed decision about your financial future. At Carroll Law Firm, P.C., we are dedicated to providing compassionate and effective legal representation to help you navigate the bankruptcy process and achieve financial stability.
As a New Jersey resident, it's important to understand civil tax violations and the potential consequences they can have on your financial well-being. Whether you've made an innocent mistake on your taxes or intentionally committed fraud, seeking legal advice from a qualified attorney is crucial in navigating the complex world of tax law. In this blog post, we'll delve into what civil tax violations are, common types of violations, and how a skilled attorney in New Jersey can assist you in resolving these issues. Civil tax violations refer to instances where taxpayers fail to comply with tax laws without any intent to commit criminal wrongdoing. These violations can range from simple errors on tax returns to more serious offenses such as underreporting income or claiming false deductions. It's important to note that civil penalties for tax violations can still result in hefty fines and other consequences, even if no criminal intent is present. This is why seeking legal guidance from a knowledgeable attorney is essential in addressing these matters effectively. One common type of civil tax violation is negligence, which occurs when taxpayers fail to exercise reasonable care in preparing their tax returns. Negligence can include careless mistakes, inaccuracies, or omissions that result in underpayment of taxes owed. Another type of violation is substantial understatement of income, which occurs when taxpayers significantly underestimate their income on their tax returns. Both negligence and substantial understatement of income can lead to penalties imposed by the IRS. In cases where taxpayers intentionally underreport their income or engage in fraudulent activities to evade taxes, they may face more severe consequences such as civil fraud penalties or even criminal charges. However, even unintentional errors on tax returns can still result in costly penalties and interest payments if not addressed promptly. This is where a skilled attorney specializing in civil tax violations can provide valuable assistance in negotiating with the IRS on your behalf and developing strategies to resolve these issues effectively. If you find yourself facing civil tax violations in New Jersey, it's crucial to seek legal representation from an experienced attorney who understands state and federal tax laws. A qualified attorney can help you navigate the complexities of the legal system, protect your rights throughout the process, and work towards achieving the best possible outcome for your case. By enlisting the help of a knowledgeable professional, you can minimize the financial impact of civil tax violations and take steps towards resolving these issues efficiently. Dealing with civil tax violations can be overwhelming and stressful for any taxpayer. However, with the guidance of Carroll Law Firm, P.C., you can rest assured that your case will be handled with expertise and care. If you're facing civil tax violations in New Jersey, don't hesitate to reach out to us. Remember that seeking professional help early on can make all the difference in successfully resolving your tax issues and moving forward towards financial stability.
Understanding The Benefits Of Chapter 11 Bankruptcy In New Jersey Facing financial difficulties can be overwhelming, but it's important to know that there are options available to help you get back on track. One such option is filing for Chapter 11 bankruptcy, which can provide individuals and businesses with a path towards financial stability. In this blog post, we will explore the benefits of filing for Chapter 11 bankruptcy, who should consider this option, and how Garden State Bankruptcy can assist the New Jersey public with their Chapter 11 bankruptcy matters. Chapter 11 bankruptcy is often referred to as reorganization bankruptcy because it allows businesses and individuals to restructure their debts while still remaining operational. One of the main benefits of filing for Chapter 11 bankruptcy is the ability to continue operating your business while developing a plan to repay creditors over time. This can provide much-needed breathing room for businesses that are struggling financially, allowing them to focus on turning their operations around without the constant pressure of mounting debt. Another benefit of filing for Chapter 11 bankruptcy is that it gives individuals and businesses the opportunity to renegotiate their debts with creditors. Through the process of restructuring their debts, filers may be able to reduce the total amount owed, lower interest rates, or extend repayment terms. This can make it easier for filers to meet their financial obligations and ultimately emerge from bankruptcy in a stronger financial position. Chapter 11 bankruptcy also provides protection from creditors through an automatic stay, which halts all collection actions against the filer. This means that creditors cannot pursue legal action, garnish wages, or seize assets while the filer works on developing a repayment plan. The automatic stay can provide much-needed relief from creditor harassment and give filers the time they need to assess their financial situation and come up with a viable plan moving forward. Who should consider filing for Chapter 11 bankruptcy? Businesses that are struggling financially and facing insurmountable debt may benefit from this type of bankruptcy as it allows them to reorganize their finances while remaining operational. Individuals who have significant assets or income may also find Chapter 11 bankruptcy beneficial as it provides them with a structured way to repay their debts without having to liquidate all of their assets. Filing for Chapter 11 bankruptcy can provide individuals and businesses in New Jersey with a fresh start when faced with overwhelming debt. By allowing filers to restructure their debts, negotiate with creditors, and continue operating their business, Chapter 11 bankruptcy offers a path towards financial stability. If you are considering filing for Chapter 11 bankruptcy in New Jersey, Garden State Bankruptcy is here to assist you every step of the way. Our experienced team can help you navigate the complexities of Chapter 11 bankruptcy proceedings and develop a plan that suits your unique financial situation. Don't let financial difficulties hold you back – contact Garden State Bankruptcy today to learn more about how we can help you achieve financial freedom through Chapter 11 bankruptcy.
Dealing with taxes can be complex and stressful, especially when you find yourself facing civil tax violations. Residents of New Jersey, like in any other state, can find themselves in hot water with state tax laws if not careful. In this blog post, we’ll discuss what civil tax violations are, how they occur, and why consulting with a seasoned civil tax violations attorney could be the best action you can take to protect your rights and finances. What Are Civil Tax Violations? Civil tax violations are non-criminal infractions of tax laws. Unlike tax fraud or evasion, which involve willful deception, civil tax violations usually stem from oversight, misinterpretation, or misunderstandings of tax regulations. Common examples include underreporting income, claiming inappropriate deductions or credits, and failing to file tax returns. In New Jersey, the consequences of civil tax violations can range from monetary fines to penalties and interest charges on unpaid taxes. In severe cases, it could even lead to liens against your property or bank levies. How Civil Tax Violations Occur For many New Jersey residents, tax violations are not a product of intentional misconduct, but often result from: Misunderstanding the intricate tax laws Oversights when preparing tax returns Incorrect or incomplete record-keeping Unintentional errors in calculations Late filing due to personal circumstances Whatever the reason behind the misstep, the implications can be serious and seeking professional guidance is crucial. The Role of a Civil Tax Violations Attorney When faced with a civil tax issue, an attorney specializing in civil tax violations provides not just legal advice but representation that can ensure your case is treated fairly under the complex New Jersey tax code. They can help you: Navigate The Legal Tax Landscape With expert knowledge of both federal and state tax laws, a tax attorney can guide you through the complexities of your obligations and rights as a taxpayer. Represent You Before Tax Authorities Skillful negotiation with tax authorities by an experienced attorney can often lead to a more favorable outcome, from reduction in penalties to setting up manageable payment plans. Address Underlying Issues An attorney can help determine the cause of tax issues and recommend strategies to prevent future violations, such as more accurate record-keeping or timely filings. Litigate In Court If necessary, a tax attorney can represent you in the court of law, defending your position and striving to get penalties reduced or dismissed. When to Contact a Civil Tax Violations Attorney You should consider reaching out to an attorney if you: Received a notice from the New Jersey Division of Taxation Are subject to an audit or investigation Disagree with the assessment made by tax authorities Need assistance with filing back taxes or correcting returns Desire to appeal a tax decision or penalty For New Jersey residents, civil tax violations can be an unsettling experience. However, understanding the role of a civil tax violations attorney and when to engage one can be the difference between swift resolution and an ongoing battle with tax authorities. If you're dealing with any issues related to civil tax violations, seeking legal help can be a wise decision. An attorney's expertise could save you not just money but also the time and stress of navigating through the system on your own. For expert advice or representation regarding your civil tax concerns, reach out to a qualified New Jersey civil tax violations attorney today. Your peace of mind and financial well-being are worth the investment. Don’t face tax challenges alone; a knowledgeable attorney is your best ally in resolving your tax issues and ensuring compliance with New Jersey tax laws.