Signing Document

4 Common Myths About Filing Bankruptcy in New Jersey

Many myths surround consumer bankruptcy, and some of them scare debtors away from filing bankruptcy when it could help.

Many people in New Jersey decide to file consumer bankruptcy after they become overburdened by debt. However, some refrain from finding financial relief through bankruptcy because they have heard intimidating myths about this legal process. Here are some of the most common myths that surround consumer bankruptcy and why they are not true.

1. Paying off the debt is a better option

Some believe that instead of filing bankruptcy, working to pay off debt is the better option. Although filing for bankruptcy is a serious financial decision, it is often the best course of action for people who have debts worth more than 50 percent of their annual income. Those who also have so much debt they cannot see themselves being able to pay it off within a five-year period may also be good candidates for bankruptcy.

2. Only the irresponsible file bankruptcy

A stigma surrounds bankruptcy that only those who cannot handle their money end up in debt and have to file. However, many people end up dealing with excessive debt after the loss of a spouse, divorce, unemployment, a severe illness or another life-changing event that unintentionally harms their finances.

3. Bankruptcy ruins a person's financial future

Those who file bankruptcy are often surprised at how quickly they are able to recover their credit. For those who file bankruptcy and want to boost their credit rating as quickly as possible, a secured credit card is recommended. Once one of these cards is obtained, regular, on-time payments should be made on it. From there, filers may be able to obtain a standard credit card.

4. All debts are discharged during bankruptcy

Some people believe that once they file bankruptcy, all of their former debts will be eliminated. Although bankruptcy does help debtors achieve a fresh financial start, some debts, like alimony payments, restitution owed and child support payments, cannot be removed during the bankruptcy process.

Additionally, those who spend without abandon right before they file bankruptcy will find that these debts are not discharged during the process. Some courts even view this action as a form of fraud.

Contact an attorney

Before filing bankruptcy, those in New Jersey may feel overwhelmed by the myths they have heard about the process and how it will impact their finances in the future. When this occurs, debtors should reach out to an attorney go over their options and to determine if bankruptcy is the right course of action for their personal situation.

Categories

Get To Know David & Robert

  • David  Alan Ast Photo
    David Alan Ast
    Firm Partner David Alan Ast has more than 25 years of experience helping people throughout northern New Jersey get a fresh start and move forward with their financial lives. He is committed to protecting the rights of his clients seeking debt relief.
  • Robert L. Schmidt Photo
    Robert L. Schmidt
    Firm Partner Robert L. Schmidt earned his Bachelor of Arts in Business Administration and Finance from Stockton State College in 1990. Three years later, he earned his Master’s degree from Rutgers University School of Business in Camden with a major in finance. Robert then acquired his J.D. from James E. Beasley School of Law at Temple University in 1997.
/

Real Stories Inspired From Real Situations

Reviews
  • “Everyone in the office was very courteous and professional.”

    - Dennis & Mary H.
  • “They were always understanding of our concerns and patient with our questions. Thank you all!”

    - Ann R.
  • “One that is there to help instead of someone who will treat you like another number. 5 stars isn't enough.”

    - M.H., Chapter 7 Client

What Sets Us Apart

How We Can Help You 
Move Forward
  • Personalized Services Tailored for You
  • Over 30 Years of Bankruptcy Experience
  • Free Initial Consultations
  • Available After Hours by Appointment
  • Direct Advice from Our Attorneys
  • Realistic Expectations Provided

Begin Your Fresh Start

Our team has over 30 years helping clients.  Let us help you.
  • Please enter your first name.
  • Please enter your last name.
  • Please enter your phone number.
    This isn't a valid phone number.
  • Please enter your email address.
    This isn't a valid email address.
  • Please make a selection.
  • Please enter a message.