New Jersey residents who have amassed substantial debt and are facing the financial, personal and emotional struggle in trying to stay one step ahead of their creditors might think they have nowhere to turn. The concept of bankruptcy is often unfamiliar to them and they have misplaced beliefs about it.
People with a regular income and items they would like to retain such as a home, automobiles and personal items like jewelry would be wise to lean toward Chapter 13. This allows them to consolidate what they owe into a plan that is completed in three or five years.
People might focus on the finances with a Chapter 13 and this could lead to overlooking basic requirements that must be completed before the plan can be approved and completed. Having help can make sure there are no errors that could jeopardize the case and prevent them from getting the needed discharge.
Debtors must have credit counseling and debtor education
Before the case is filed, the debtor must take part in credit counseling. After filing, they must complete a debtor education course. These should not be glossed over.
Credit counseling must be completed within 180 days before filing. It is designed to ensure that bankruptcy is the best option; that they understand consequences of bankruptcy; and that all other ways to get out of debt have been explored and found to be less effective than bankruptcy. There are accredited agencies that provide this service and it can be done via telephone, internet or in person.
Debtor education is also referred to as a personal financial management course. This is not done in lieu of credit counseling. It comes after the case has been filed and is a requirement before the debt can be discharged, which is the entire goal of filing for Chapter 13. It gives the debtor tools to avoid running into the same problems they did before. For example, many debtors overextended themelves on questionable purchases via credit card. The course teaches them to budget and be better prepared to prevent massive debt from accumulating.
Know all the aspects of Chapter 13 for a successful outcome
These might seem to be minor parts of the case, but it is common for people to make mistakes that sabotage their discharge. With Chapter 13 bankruptcy, there are myriad benefits, notably a person can retain their valuable property and get into a better position financially. Knowing and following all the requirements from the start can smooth the process.
