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Using bankruptcy to get out of debt in New Jersey

Once seen as a shameful move, filing for bankruptcy has become an accepted way to help New Jersey debtors organize or get out from massive debts. Chapter 7 bankruptcy allows an individual to have his or her non-exempt assets liquidated to pay off creditors. Most remaining unsecured debt is fully discharged within 4 to 6 months after the filing.

Chapter 13 bankruptcy is a repayment plan that last for three to five years. Under the plan, some or all of the outstanding debt will be repaid, with most remaining unsecured debt discharged at the end of the period. Those who make too much to qualify for Chapter 7 bankruptcy may be forced to choose such an option. During the repayment period, those who see a change in their financial situation may qualify for a conversion to Chapter 7 or have their case dismissed.

While a bankruptcy may stay on an individual's credit report for many years, it may be possible to apply for loans much sooner than that. Depending on an individual's ability to limit his or her new debt and pay it promptly, he or she may be able to obtain a good FICO score relatively quickly. In some cases, it may be possible to apply for a new mortgage soon after a bankruptcy.

Reorganizing debt through a Chapter 13 bankruptcy may help those who wish to repay their debt do so without sacrificing their overall financial security. However, those who wish to have their debt eliminated quickly may benefit more from Chapter 7 bankruptcy. An attorney who has experience with these matters can explain the eligibility ad other requirements attendant to each chapter.

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