Filing for bankruptcy is a major decision and the law in this area is nuanced. New Jersey has state-specific laws that filers should be aware of.
Below are some of the most common questions about bankruptcy in the Garden State.
Are there different types of bankruptcy?
Yes, there are different types of bankruptcy, and Chapter 7 and Chapter 13 are the most common. Chapter 7 is a liquidation bankruptcy and involves the filer selling non-exempt assets to pay creditors.
Chapter 13 is a reorganization bankruptcy. This allows the filer to create a repayment plan that covers debts. Usually, the plan lasts between three and five years.
Does bankruptcy stop foreclosure?
One of the main concerns of those in debt is losing their home. Typically, bankruptcy stops foreclosure. However, this is only for a temporary period while you reorganize your finances and catch up on mortgage payments or arrange a repayment plan.
Does bankruptcy ruin my credit?
Bankruptcy impacts your credit rating but it doesn’t necessarily ruin it. In fact, it may provide you with a platform to build a better credit rating in the long run. Bankruptcy stays on your credit report for up to 10 years, but good financial habits during that period will improve your credit rating.
These are just some of the most common questions about bankruptcy in New Jersey. Before proceeding, it’s important to have all of the relevant information. For instance, you may want to know how much it costs to file for bankruptcy, or what assets are exempt and non-exempt. You should also consider seeking legal guidance to obtain more information that’s specific to your situation.