Overwhelming debt can affect every part of daily life. Federal bankruptcy law offers two common paths for individuals: Chapter 7 and Chapter 13. Choosing between them is a legal decision with lasting consequences. A bankruptcy lawyer in Paterson, NJ can review your income, assets, and goals before you commit to either path.
This article explains what each chapter does and which documents to prepare. It is general information, not legal advice. Every case depends on its specific facts.
What Bankruptcy Can and Cannot Do
The U.S. Courts explain the basics of bankruptcy on their official site. Filing generally triggers the automatic stay. That order pauses most collection actions while the case moves forward.
Bankruptcy does not erase every debt. Child support, most student loans, and certain taxes usually survive a discharge. A lawyer can explain which categories apply to your situation.
Chapter 7 at a Glance
Chapter 7 is the liquidation chapter. A trustee reviews your assets and may sell nonexempt property to pay creditors. Qualifying unsecured debts can be discharged in a matter of months, once the trustee completes the review.
Exemptions protect certain property from the trustee. New Jersey law recognizes specific exemptions. Their application depends on the assets involved and on prior filings.
Eligibility depends on the means test. The official means test forms are published by the U.S. Courts. Income below the state median may qualify without further analysis. Higher income requires a detailed calculation.
Chapter 13 at a Glance
Chapter 13 is the reorganization chapter. You propose a repayment plan that runs three to five years. Regular income is required, because the plan depends on payments you can sustain.
In exchange, most people keep their property. The plan can also catch up missed mortgage or car payments over time. That is a common reason homeowners choose this chapter.
Key Differences: Which Path Fits Your Situation
Chapter 7 moves faster and focuses on discharging debts. Chapter 13 takes longer but protects property and spreads payments out. The means test, your assets, and your goals drive the choice.
Neither chapter is automatically better. The right path depends on income, the type of debt, and what you need to protect. A short consultation can narrow the options quickly.
Cost also matters. Filing fees and attorney fees exist for both chapters. In Chapter 13, fees are often paid through the plan. Ask about cost before you commit to a path.
Bankruptcy Is Not the Only Option
Bankruptcy is one tool among several. Direct negotiation with creditors, consolidation, or simply reorganizing a budget can fit some situations. Each option carries different risks and timelines.
A lawyer can explain what each option would mean for your specific debts. That includes what creditors can and cannot do while you decide.
Documents to Prepare Before Your Consultation
Bring recent pay stubs, the last two years of tax returns, and a list of assets and debts. Mortgage statements, car loan statements, and account balances complete the picture. Monthly living expenses help test if Chapter 7 or Chapter 13 fits.
Do not transfer property or repay a relative before the consultation. Those moves can complicate a case. Explain them to your lawyer instead.
Bring questions about deadlines, property, and co-signers. Co-signed debts can affect another person. That is worth flagging early.
What a Bankruptcy Lawyer in Paterson, NJ Evaluates First
The first review covers income, assets, prior filings, and the types of debt you carry. Timing matters as much as eligibility. Filing too early or too late can change the outcome.
Salomon & Aquino, LLC represents clients in Chapter 7 bankruptcy in New Jersey and can evaluate if a Chapter 13 plan fits better. The firm is based in Paterson and speaks Spanish. Hablamos Espanol.
Talk to a Bankruptcy Lawyer in Paterson, NJ
If debt has become unmanageable, contact Salomon & Aquino, LLC to discuss your options. A short consultation can clarify which chapter fits and what to prepare. This article is general information and is not legal advice.