Many of my clients are not sure which type of bankruptcy to choose. This is understandable since the bankruptcy process can be confusing without proper guidance. There are four types of bankruptcy cases provided under the law:

Chapter 7 results in a discharge of most debts and allows people to have a fresh start. This is the most common type of bankruptcy. Immediately upon filing, creditors are prohibited from collecting their debts. The discharge is issued in about four months and permanently erases most debt.

Chapter 11 is known as “reorganization”, and is used by businesses and a few individual debtors whose debts are very large. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11. Many casinos in New Jersey have filed Chapter 11 bankruptcy.

Chapter 12 is a relatively new addition to bankruptcy laws. It allows “family farmers” and “family fisherman” to restructure their finances and avoid liquidation or foreclosure. The main difference between this and a Chapter 13 is that this form of bankruptcy provides additional benefits to debtors.

Chapter 13 is called a “debt adjustment”. It requires a debtor to put together a plan to erase dischargeable debts (like Chapter 7) and to catch up payments on debts that may not be erased. For example, Chapter 13 plans catch up delinquent payments on car loans, mortgages, and taxes.

You should consult with an experienced New Jersey bankruptcy attorney to protect your assets before filing. Contact me today to schedule a consultation to learn more about the bankruptcy process.