What Are The Types Of Bankruptcy

Short Summary:

Here’s a brief overview of what you need to keep in mind about bankruptcy types in Bridgewater, NJ:

Bankruptcy is a legal process that allows individuals and businesses to discharge their debts or reorganize their finances, offering a fresh start.
There are six types of bankruptcy in the United States: Chapter 7, Chapter 13, Chapter 11, Chapter 12, Chapter 15, and Chapter 9, each designed for specific situations.
Benefits of bankruptcy include financial relief, stopping creditor harassment and lawsuits, and protecting assets.
Drawbacks include potential damage to credit scores and difficulty in obtaining future loans, and not all types of debt may be discharged.
Common reasons for filing bankruptcy include job loss, medical bills, credit card debt, divorce, and unexpected expenses.
Other less common reasons include student loan debt, business failure, gambling debts, and excessive spending.
To file for bankruptcy in Bridgewater, NJ, gather financial documents, choose the appropriate bankruptcy chapter, complete and file bankruptcy forms, pay the filing fee, attend a meeting of creditors, and wait for the court’s decision.
Seek assistance from an experienced bankruptcy attorney at Karina Lucid Law to navigate the complex bankruptcy process and ensure your specific needs are met for financial relief and debt management.

Get personalized legal help regarding the different types of bankruptcy

You might have received advice from your friends and family or even read numerous web articles about filing for bankruptcy to resolve your debt problems. If you are considering it, you are not the only person with many questions. You might wonder what are the types of bankruptcy in Bridgewater, NJ. We encourage you to speak with our experienced bankruptcy attorney if you need efficient assistance.

Karina Lucid Law will help you understand the overall process and concepts of bankruptcy and offer personalized legal services for your specific needs. Every bankruptcy case is unique and should be handled with respect, care, and compassion. If you still hesitate to file, let us work together and find the best solution for your financial challenges. Get a free consultation now!

What is Bankruptcy?

Bankruptcy is a legal process that allows individuals and businesses to discharge their debts or reorganize their finances. It is a last resort for many people, but it can be a way to get a fresh start and rebuild their credit.

What are the Types of Bankruptcy?

There are six types of bankruptcy in the United States:

Chapter 7 bankruptcy: Chapter 7 bankruptcy is the most common bankruptcy type for individuals. It is also known as liquidation bankruptcy. The debtor’s nonexempt assets are sold to pay off creditors. Any remaining debts are discharged, meaning the debtor is no longer legally obligated to repay them.
Chapter 13 bankruptcy: Chapter 13 bankruptcy is also called reorganization bankruptcy. The debtor creates a repayment plan to pay off their creditors over some time, usually between three to five years. If the debtor completes their repayment plan, their remaining debts are discharged.
Chapter 11 bankruptcy: Chapter 11 bankruptcy is a reorganization bankruptcy for businesses. The business develops a plan to reorganize its debts and operations. It can continue to operate if the plan is approved by the bankruptcy court.
Chapter 12 bankruptcy: Chapter 12 bankruptcy is a reorganization bankruptcy for family farmers and fishermen. The farmer or fisherman develops a plan to reorganize their debts and operations. They can continue operating if their plan is approved by the bankruptcy court.
Chapter 15 bankruptcy: Chapter 15 bankruptcy is a cross-border bankruptcy. This type of bankruptcy is for businesses and individuals with debts and assets in multiple countries.
Chapter 9 bankruptcy: Chapter 9 bankruptcy is bankruptcy for municipalities, such as cities and counties. This type of bankruptcy is rare since Chapter 9 bankruptcy is only available to municipal entities, not individual businesses.

Benefits of Bankruptcy

Primarily, bankruptcy is filed by people facing overwhelming debts to attain financial relief and a fresh start. Below are some of the benefits of bankruptcy:

Bankruptcy can help people get out of debt and get a fresh start financially.
Bankruptcy can stop creditors from harassing and suing debtors.
Bankruptcy can protect a debtor’s home and other assets from creditors.

Drawbacks of Bankruptcy

While it comes with many benefits, bankruptcy also presents challenges and drawbacks. Understanding these drawbacks is imperative for making informed decisions if you are considering filing for bankruptcy.

Bankruptcy can damage a debtor’s credit score.
Bankruptcy can make it difficult to borrow money in the future.
Bankruptcy may not discharge all types of debt, such as student loans and child support.

Overall, bankruptcy is a serious decision, but it can be a way for people to get a fresh start financially if they are struggling with debt.

Why Do People File for Bankruptcy?

People file for bankruptcy for numerous reasons, but the primary motivation is usually financial distress and the need for debt relief. Debtors are faced with the challenge of being unable to pay their creditors. Here are some of the most common reasons why individuals and businesses may choose to file for bankruptcy:

Job loss or loss of income: When people lose their jobs or income, they may no longer be able to afford their monthly expenses. That can lead to missed payments and a spiral of debt.
Medical bills: Medical bills are a major cause of bankruptcy, even for people with health insurance. High deductibles, copays, and out-of-pocket costs can make it difficult for people to pay for medical care, especially if they have a chronic condition or need expensive treatment.
Credit card debt: Credit card debt is another common cause of bankruptcy. People may use credit cards to pay for unexpected expenses or to live beyond their means. Over time, credit card debt can add up and become unmanageable.
Divorce: Divorce can be a financially stressful experience. People may have to divide their assets and debts, and they may have to pay alimony or child support. That can make it difficult for people to afford their living expenses.
Other unexpected expenses: Other unexpected expenses, such as car repairs, home repairs, or natural disasters, can also lead to bankruptcy.

In addition to these common reasons, people may also file for bankruptcy due to:

Student loan debt: Student loan debt can be a significant burden, especially for recent graduates struggling to find jobs or start careers.
Business failure: Business owners may file for bankruptcy if their businesses fail. Various factors, such as economic downturns, changes in the market, or personal financial problems, cause this.
Gambling debts: Gambling debts can be problematic to repay and quickly spiral out of control.
Excessive spending: Some people may file for bankruptcy due to excessive spending. Impulse control problems, addiction, or mental health issues are some causes.

How Do I File for Bankruptcy in Bridgewater, NJ?

Here are the steps to file for bankruptcy in Bridgewater, NJ:

Gather your financial documents. That includes your bank statements, credit card statements, tax returns, and pay stubs.
Choose a bankruptcy chapter. The most common types of bankruptcy for individuals are Chapter 7 and Chapter 13, but choose the bankruptcy chapter that suits your situation.
Complete and file the bankruptcy forms. You can find these forms on the United States Bankruptcy Courts website.
Pay the bankruptcy filing fee. The bankruptcy filing fee is $335 for Chapter 7 bankruptcy and $310 for Chapter 13 bankruptcy.
Attend a meeting of creditors. This meeting is for your creditors to ask questions about your debts and assets.
Wait for the bankruptcy court’s decision. The court will issue a discharge order if you are eligible for bankruptcy. This order will discharge your debts, meaning you are no longer legally obligated to repay them.

Call our Bankruptcy Attorney in Bridgewater, NJ, Now!

One of the most common questions our law firm receives from our clients daily is, “What are the types of bankruptcy in Bridgewater, NJ?” Asking this question to someone experienced in the practice area is a wise move. Instead of going through the complex bankruptcy process alone, you need to seek assistance from our experienced bankruptcy attorney to avoid mistakes.

Karina Lucid Law puts your financial freedom first. We help individuals and small businesses obtain relief through debt negotiation, debt consolidation, and bankruptcy. We ensure your specific needs will not be undermined and receive the effective service you rightfully deserve.

If you want to get rid of your debts by liquidating your assets, creating a repayment plan, or reorganization, our experienced bankruptcy attorney will assist you!