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New Jersey personal bankruptcy offers alternatives

People in New Jersey who are suffering from a high level of debt may not know that there are several different Chapters of the Bankruptcy Code. In fact, there are two that are commonly used when people in our state file for a personal bankruptcy: Chapters 7 and 13. There are differences between the chapters, including what it takes to be able to use them and how they can protect a person's property when they decide to enter into the bankruptcy process.

For some people in New Jersey, filing a personal bankruptcy under Chapter 13 is the best decision. In such instances, the person is most often a wage earner who can afford to make payments that are ordered by the trustee. In most cases the repayment pan lasts for three to five years and will result in many, if not all, of the debts to be repaid. The good news under this chapter is that much of the property owned when the bankruptcy is filed can be kept, subject to exemptions.

In a Chapter 7 personal bankruptcy, on the other hand, a person must first qualify under the means test before they can file their petition. Often referred to as a total liquidation, this type of filing allows for a total discharge of unsecured debts when the process is successfully completed. Though there are exemptions that apply to this type of filing, it may do well for a person to review what property can be retained in such bankruptcy matters.

Filing for a personal bankruptcy brings long overdue relief for many people. This is because of the complicated nature of the process and due to the efforts that folks have made to repay the debts that they owe. However, when the choice to file appears to be the responsible choice, it is a good idea to gain a working knowledge of the applicable laws and procedures to work toward a fresh financial start, free from overwhelming debts.

Source: jacksonsun.com, "BBB: Learn the ins and outs of bankruptcy filing," Randy Hutchinson, April 18, 2013

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