When New Jersey residents are in financial distress, they might begin to think that bankruptcy would be a viable way to deal with the overwhelming amount of debt they incurred for whatever reason. Unfortunately, there are so many myths surrounding Chapter 7 bankruptcy that some people might not file for fear that those myths are true. However, understanding the facts about bankruptcy can help dispel those myths.
Many New Jersey residents are under the impression that they will lose their homes, cars and other personal property when they file. In many cases, that does not happen. The U.S. Bankruptcy Code and New Jersey law allow for certain assets to be retained by a filer so long as their value does not exceed prescribed amounts. This means that most people get to keep their property.
Other people are under the impression that there are limits to the amount of debt an individual can have in order to file Chapter 7 bankruptcy. It is not the amount of debt alone, but how it relates to income that determines whether a person can file under this chapter. It is also a fallacy that a person will not be able to obtain credit once the bankruptcy is closed. With an increase in disposable income after the filing, an individual will have opportunities to repair his or her credit.
What a person can or cannot do before, during or after a Chapter 7 bankruptcy is not up to public opinion and rumor. Many people have passed up the opportunity at a fresh start because they did not understand the process. The only way to really know what can or cannot be done is to consult with a bankruptcy attorney.
Source: lawndalenews.com, “Chapter 7, Fact vs Fiction“, Zalutsky & Pinski, March 31, 2016