Someone considering bankruptcy usually worries about what possessions they might lose through the process and whether bankruptcy is ultimately the right choice for themselves or their family. Most people who have even a small amount of debt, however, feel the need for a fresh start and a break from harassing creditors and mounting debt.
State and national bankruptcy codes are very complex, but an experienced bankruptcy attorney can help make clear whether bankruptcy is the proper course for anyone's particular circumstances.
Bankruptcy Exemptions: Protecting Your Assets
A bankruptcy petition may be filed under either the U.S. or New Jersey bankruptcy code, but not both. The most applicable difference between these is the ability to exempt, or protect, certain assets during the proceedings.
Exemptions allow people to shield certain property from their creditors, but they can only shield a certain amount. These exemptions generally cover property deemed necessary for a person's fresh start or property which holds significant sentimental value.
Chapter and Jurisdiction Selection
Before filing a petition with the court, a careful analysis of your assets and debts will be conducted. After examining the financials, an attorney can recommend which bankruptcy chapter to file under - Chapter 7 or Chapter 13 - and whether to do so under the state or national bankruptcy code.
Benefits of Chapter 7: Most Common Form of Bankruptcy
Most bankruptcy petitions are filed under Chapter 7. Chapter 7 is a process where non-exempt assets are sold to pay creditors. At the end of the process, however, a person's debts are discharged and their exempt assets remain in the person's possession.
Additionally, most Chapter 7 filings are "no asset" cases. Bankruptcy is considered by many as a last resort to manage financial troubles. Therefore many people actually leave bankruptcy with most, if not all, of their assets.
While most debts are eligible to for discharge, most people find solace in bankruptcy's automatic stay. Once a petition is filed, a creditor may no longer initiate or continue any collection practice including foreclosure, garnishment or even making a phone call.
Anyone having questions about their eligibility for bankruptcy, what assets they might save, and whether bankruptcy is appropriate given their circumstances should contact a qualified bankruptcy attorney immediately.
