Bankruptcy is federal law that allows individuals an opportunity to get a fresh start in life and get out from under their debts. This is done by either wiping out ("discharging") the debt, or paying it back over time ("restructuring" it). 

What Are the Different Chapters in Bankruptcy?

These different goals of bankruptcy are addressed by different "chapters" in the Code. They should be familiar to you

Chapter 7 Bankruptcy

This is the orderly liquidation of assets of an individual, married couple, corporation, partnership or LLC. The individual or married couple then gets a fresh start when they emerge (most often without liquidation of assets due to exemptions, which will be discussed later), while the business entity does not emerge, but simply goes out of business.

Chapter 13 Bankruptcy

This kind of bankruptcy allows individual wage earners and self employed sole proprietors with a small amount of business debt to reorganize their debt and pay it back over time (no more than five (5) years), often without the accrual of interest on said debt, and many times without paying all of it back.

This gives a great deal of leverage to debtors by allowing them to dictate terms of repayment, and do things like cure mortgage arrears, reduce monthly car payments, and pay back debt such as credit card balances without dealing with the crushing load of the interest rates.

Chapter 11 Bankruptcy

This chapter allows for the reorganization of the debt of corporations and individual sole proprietors with large amounts of business debt. It is also probably the best known of the types of bankruptcy to the general public. Again, this type of bankruptcy is beyond the scope of this booklet, but is mentioned here for the sake of completeness.

So Should I File Bankruptcy?

That is the ultimate question, isn't it? You found this page because you were searching for information because you were thinking about it.

If you live in Burlington, Camden, Gloucester, Salem or Cumberland County and are considering filing bankruptcy, call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.

If you have more questions about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

Not sure if bankruptcy is right for you? Take the quiz to the right to find out more!

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.