The Cassidy Law Firm Blog

Thursday, May 15, 2014

Should I File Chapter 7 Bankruptcy in Middletown?

For most people, bankruptcy is an avenue of last resort, only to be considered when everything else has been tried and has failed. It is unfortunate that people view bankruptcy this way as they frequently waste considerable sums of money and even lose valuable assets trying to avoid bankruptcy that could have been protected in bankruptcy. If you are facing financial hardship and are considering filing a chapter 7 bankruptcy you should consult with an experienced New Jersey bankruptcy attorney; however, in the meantime there are some common considerations that may help you decide if filing a chapter 7 bankruptcy is right for you.

  • You have suffered prolonged financial hardship. Bankruptcy should only be considered if you have been suffering financial hardship for an extended period of time. A good rule of thumb is six months; however, if you suddenly incur extremely high medical bills as a result of a medical emergency, or find yourself in a similar situation, you may make the decision to file for bankruptcy much sooner.
  • There is no apparent relief in sight. If your financial situation is likely to continue unchanged for the near future bankruptcy is likely the best option.
  • You pass the means test. To be eligible to file a chapter 7 bankruptcy you must first pass what is referred to as the “means test”. The means test compares you income to that of similarly situated debtors in your geographic area to determine if your income is at or below the median. If it is you may file a chapter 7. If it is not you must use another chapter.
  • Your important assets are protected by exemptions. Being eligible to file a chapter 7 bankruptcy doesn’t always mean is it the best option for a debtor. Chapter 7 results in the discharge of most debts without the need to repay them, as is the case in a chapter 13 bankruptcy; however, non-exempt assets are also at risk in a chapter 7 unlike in a chapter 13. If all of your important assets are protected by a state or federal exemption and you passed the means test then chapter 7 may be right for you.

If you are considering Chapter 7 bankruptcy in Middletown as an option to your financial difficulties, the best thing you can do is consult with an experienced Middletown bankruptcy attorney as soon as possible to ensure that you and your assets are protected.

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