Some New Jersey residents may view bankruptcy as an end to their financial lives. Others may view it as an easy way out of debt. It’s important to recognize that while bankruptcy may help with debt relief, it does carry important requirements and consequences. Those who view it as an easy solution need to realize that it may impact future interests in financial and other matters. However, it may provide a fresh start to those in need of relief.There are two primary choices for personal bankruptcy. Chapter 13 is an option that allows debt payments to be adjusted so that an individual can deal with debt while still having the resources to pay for regular needs such as food and shelter. Chapter 7 is more of a liquidation approach, allowing for the discharge of most unsecured debt. This won’t provide relief from income taxes, alimony or child support, but it may be an option for getting rid of overwhelming credit card balances, medical bills, civil judgments and other costs that are making it impossible to keep up.In order to qualify for Chapter 7 bankruptcy, an individual or couple must participate in counseling and meet income and means criteria. If these standards are not met, Chapter 13 is necessary. Additionally, it may be important to think about the implications for secured assets such as a home or automobile. Chapter 13 may be a better option for the person who is trying to stay out of foreclosure. In Chapter 13, a stay can be issued so that creditors are required to terminate efforts to recover funds through harassing phone calls and other negative methods.Incorrect decisions in filing bankruptcy may result in challenging circumstances later on, making it wise to consider working with a bankruptcy attorney from the outset. An initial meeting may allow for all possibilities to be explained so that the requirements and implications are thoroughly understood.
Source: Ebony, “The Different Degrees of Bankruptcy, Explained“, Lynnette Khalfani-Cox, June 19, 2014