Readers in New Jersey have likely heard of the recent filing of a bankruptcy by a major city in our nation. What they may not have considered is that there are many similarities between that filing and those of individuals in our state filing a personal bankruptcy. In fact, the similarities are in both the situations that got the city to the brink of financial collapse and strategies on how to repair a financial life.
Like the city, some people in New Jersey find that they are unable to repay the debts that they owe. In many cases, the debts are from a combination of creditors that include credit cards, student loans, mortgages and others. Many of these can be discharged when a successful personal bankruptcy is completed.
When a personal bankruptcy occurs, a court requires that the person filing disclose all of their income and liabilities. This disclosure must include all available assets that can be used to repay the debts that are owed. This is also the case in a municipal bankruptcy where the money taken in must be used to pay debts such as pensions and retirements.
Filing for a personal bankruptcy is rarely the first choice of people in New Jersey. However, many find that it is a good choice. This is because, like the city that recently filed, individuals can find that they are able to restructure their finances and restart their economic lives when the process concludes successfully. This is a great result for all, regardless if they are an individual or a city.
Source: The Christian Science Monitor, “Personal finance lessons from the Detroit bankruptcy,” Trent Hamm, July 26, 2013