It takes a lot of courage for a person to file for bankruptcy and realize that it may be time to get some help. Filing for personal bankruptcy can have a significant impact on one’s future, so making the decision should not be taken lightly. Before a person makes the final decision to file in a federal Bankruptcy Court in New Jersey, there are some major advantages and disadvantages which should be looked at more in-depth.
Not all debt can be removed during bankruptcy, though most forms of debt can be discharged. Generally, student loan debt, taxes and child support obligations may not be discharged. Filing for bankruptcy does result in an automatic stay so that all of the calls from creditors cease immediately, which can provide a major sense of relief. A filer may lose all of their credit cards during the process but that may not be a negative result if they were part of the reason for the financial difficulties in the first place.
If a person has a lot of luxury items, those assets may be sold to pay down some of the debt. There are also items of personal property that are exempt and not subject to liquidation, though the bankruptcy exemptions vary from state to state. For several years following the bankruptcy, a person’s credit score may be lower, but a bankruptcy discharge also gives an individual the opportunity to rebuilt their credit and achieve financial stability all over again.
Many New Jersey residents look at filing for personal bankruptcy protection as a sign that debt has defeated them and there is no other way out. Filing for bankruptcy is actually a sign that a person understands that there is a problem. It also suggests that there is a solution to that problem that could pave the way to a successful future.
Source: FindLaw, “Bankruptcy: Advantages and Disadvantages“, , Aug. 29, 2014