New Jersey residents who have filed for bankruptcy may wonder about mistakes commonly made in the process. Knowing what to expect from the process can help people to prepare and recover more easily.
It is important to know what bankruptcy costs and how long it takes. A Chapter 7 bankruptcy, which liquidates a person’s assets and sells them to pay debts, can cost between $2,500 and $10,000. A Chapter 13 bankruptcy, on the other hand, which allows a person to reorganize debts, can cost $15,000 or more. A simple Chapter 7 case may be completed in less than 120 days while a Chapter 13 case may take two years.
One mistake that many people who go through a bankruptcy make is allowing their homes to be lost to foreclosure. There are ways for people in bankruptcy to try to keep their homes. It is also important for a person to know what assets are exempt. For example, up to 75 percent of a person’s wages may not be taken. Personal items, such as cookware and clothing, cannot be taken. There are some exemptions for jewelry up to a certain limit and retirement accounts and pensions are exempt from being taken as is student financial aid. People who use certain tools in their trades or businesses may also be able to keep some portion of those tools from being taken.
While no one plans to need to file for bankruptcy, the process can be an invaluable protective measure for those who need it. When a person cannot pay debts, a bankruptcy attorney may be able to help review whether Chapter 7 or Chapter 13 would be more appropriate. The attorney may also be able to help file paperwork to start the bankruptcy process or help develop a reorganization plan.
Source: Forbes, “How To Bounce Back From Bankruptcy & The Loss Of Your Home“, Cameron Keng, August 05, 2013