The rules that apply to the filing of a personal bankruptcy can be confusing to some in New Jersey. This is because the rules relate to not only what property can be maintained after the process is complete, but also to which chapter of the code may be used by an individual. Commonly though, people decide to either file a Chapter 7 or Chapter 13 bankruptcy when the find that they need help.
A Chapter 7 bankruptcy is called a total liquidation. To qualify for this type of bankruptcy, a means test is conducted. It the Chapter 7 is used, a person may find that they are able to discharge many, if not all, of their unsecured debts at the end of the process.
A Chapter 13 bankruptcy, however, is referred to as a 'wage earner' bankruptcy. This type of filing means that people in New Jersey and elsewhere are able to keep many of their assets. In fact, the filing may also allow a struggling homeowner to become up-to-date on their mortgages if they have fallen behind. In addition, debtors are required to make payments to the trustee of the bankruptcy case that are intended to repay some, if not all, of what is owed.
Filing for a bankruptcy can be stressful to some, regardless of whether it is a Chapter 13 or a Chapter 7. However, the good news is that the bankruptcy process can end with a person bale to be free from many of the debts that have caused the emotional strife in the past. This freedom is important to those who are eager to begin their financial loves as quickly as possible.
Source: investinganswers.com, "Chapter 13 Bankruptcy Definition & Example," July 10, 2013