People in New Jersey who are struggling with debt may be considering filing for bankruptcy. There may be several good reasons to pursue this course of action. If a person is facing a lawsuit from creditors or foreclosure on a home, filing for bankruptcy can stop it, at least temporarily.

People may want to consider bankruptcy if they are using their retirement account or credit cards to pay bills or if paying off debt will take five or more years. Certain debts cannot be discharged through bankruptcy, such as some taxes, child support and alimony. However, bankruptcy can lead to many other obligations being discharged, including medical debt, credit card debt, utility bills and mortgages. The first three are unsecured debt and can be discharged in a Chapter 7 bankruptcy. A mortgage is an example of secured debt, meaning that a home could be repossessed. A person who files for Chapter 13 bankruptcy might still be able to keep the home, however.

Qualification for Chapter 7 or Chapter 13 bankruptcy is largely based on income. Individuals who qualify for Chapter 7 can discharge eligible debts, and the process takes around three to six months. Chapter 13 bankruptcy is much longer and involves working out a payment plan with creditors to repay debts over a period of three or five years, but it is a way to keep certain property.

Consulting an attorney may help people understand their debt relief options. An attorney may be able to help with the process of filing for bankruptcy and answer questions, such as explaining what property may be exempt even in a Chapter 7 filing. Forms must be filled out accurately or the bankruptcy could be delayed, and an attorney might help ensure this accuracy.