Pride Shouldn’t Stand in the Way of Seeking Bankruptcy Protection

Almost every day we are continually bombarded by the media regarding the current state of the economy. For example, we can hardly turn around without being reminded about just how bleak the economy is in the United States - with news sources reporting record job loss and record high home foreclosure rates.

Unfortunately, New Jersey families are not immune from this historical economic downturn often dubbed the "Great Recession." Many of the families suffering financial hardships - such as a job loss, unexpected medical bills or severely underwater homes - have considered Chapter 7 or Chapter 13 bankruptcy as their best option to obtain the fresh start they so desperately need. Tragically however, even though many New Jersey families realize that bankruptcy is their best option, they avoid this option when they let their pride get in their way - often to the detriment of their families' finances.

When contemplating bankruptcy, it is important to take pride out of the equation. The ultimate consideration should be the financial well-being of yourself and your family. After all, bankruptcy is not about failure, but instead about obtaining a fresh start.

In addition, when weighing whether or not to file bankruptcy it should not be considered a punishment. There is a reason bankruptcy laws exist, and there is nothing shameful about using them. Filing for bankruptcy will not create a situation in which all of your creditors begin harassing you as punishment for bankruptcy. In fact, the inverse is usually true as filing for bankruptcy automatically stops all efforts and lawsuits by creditors to collect money from a debtor.

Another misconception that keeps debtors from filing for bankruptcy is that they will lose everything to creditors, which is not the case. Here in New Jersey, debtors have the option of using either the federal or state exemptions when filing for bankruptcy. Bankruptcy exemptions are important as they delineate the assets that are exempt from the bankruptcy estate - thus not subject to liquidation and safe from creditors.

Just to name a few of these exemptions, if a New Jersey debtor were to select to use the federal bankruptcy exemptions for example, they would be able to take advantage of the homestead exemption that protects real estate or equity in real estate up to $21,625. Conversely, New Jersey bankruptcy exemptions include an exemption for wages - 90 percent of income that is less than 250 percent of the federal poverty level or 75 percent of income more than the 250 percent poverty level.

Lastly, it is vital for debtors to realize they are not alone. Millions of bankruptcies have been filed throughout the years. Do not let your pride get in the way of a fresh start that millions have already realized. If you are considering bankruptcy, it is important to speak with an experienced bankruptcy attorney in your area to be advised of your best options given your circumstances.