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Bankruptcy 101 for Essex County residents

Any Essex County resident who is looking into the possibility of bankruptcy might quickly find him or himself a little turned around. It can be very hard to understand the whole process and while research into what bankruptcy is and how it works is absolutely necessary, it can quickly leave anyone feeling like he or she no longer knows which way is up.

So, here are a few things to think about if you are considering filing for bankruptcy. Hopefully, these will help you keep your thoughts organized as you gather all the information you'll need to make an informed decision.

The first thing to do is to honestly assess whether bankruptcy is necessary. For example, try to really think -- are you just in a temporary financial drought, or is there some underlying, systematic problem with your finances (i.e. an unmanageable amount of medical debt, runaway credit card bills, etc.). If your answer is the former, then bankruptcy may not be the right step at this time. If it is the latter, however, it is definitely something to consider.

Second, think about whether you want to file for Chapter 7 or Chapter 13 bankruptcy. A lawyer can spell out the differences between the two at length, but in brief, Chapter 7 discharges your unsecured debts (again, like credit cards and medical bills), whereas Chapter 13 gets your debt onto an aggressive payment plan. There are advantages and disadvantage to each that, again, you will need to have explained to you in more time than we can spend here.

Finally, start getting all your documentation regarding your debt and financial situation together. This means receipts, statements, correspondence with lenders, etc. This will help you and anyone who helps you file for bankruptcy develop a clear understanding of your financial picture.

Our office works with people who are interested in learning more about the possibility of filing for bankruptcy. If you would like to learn more about the sort of work we do, stop by the Personal Bankruptcy page of our website. It might be a good starting point as you go about informing yourself about bankruptcy.

Source: U.S. News & World Report, "Are You Too Broke to Go Bankrupt?" Daniel Bortz, July 26, 2012

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