Unexpected difficulties may arise in life. You may have a sudden accident, you may get sick, or you may face various situations in which money is urgently needed. In some cases, you’re working hard to make money, but once you’ve accrued debt, it’s hard to pay it off.
As I said in the previous column, bankruptcy in the United States, or bankruptcy, has the ultimate goal of enabling a financially fresh start for those who cannot repay their debts relative to their assets or income. . Then, if you have a fixed income and a lot of property, can’t you go bankrupt?
Unlike Chapter 7, Chapter 13 is a bankruptcy system that allows you to pay off part of your debt and write off the rest of your debt for a certain period of time if you have property and a high-income salaryman with proof of fixed income, but your debt exceeds your income and it is difficult to repay immediately. no see. If a 3-5 year debt repayment plan is approved by the court and payment of the set debt is completed, the remaining debt can be forgiven. And while you file for bankruptcy, your assets, such as your car, business, or home, may remain intact. Eligibility is available under federal law to anyone with a debt of $2,750,000 or less. In the case of New Jersey, debts that do not require collateral, such as credit card debt or medical expenses, must be less than $336,900, and mortgage loans such as real estate must be less than $1,010,650 to apply. You must have paid federal and New Jersey income tax for four years.
Just from the explanation, you might be wondering if Chapter 13 is better than Chapter 7. You don’t have to pay off your debt in full right away, you only need to pay off part of it, and you can keep your home and car. However, about 65% of bankruptcy filings in the United States file for Chapter 7. If Chapter 7 is a system that cancels the majority of debt and gives you a chance to start anew, Chapter 13 is a system that helps individuals repay their debts in a planned way so that they can recover. So, in the case of Chapter 13, even if part of the debt is forgiven, a certain portion of the income must be paid back for the debt over a certain period of time.
The purpose of bankruptcy is to bail out, but doing well in bankruptcy also requires strategy. You should consult an experienced and competent bankruptcy attorney to determine which bankruptcy system is advantageous for you and to accurately determine your assets, liabilities, and bankruptcy. If you have any questions about bankruptcy, please contact us at mail@songlawfirm.com.