The key to protecting and preserving the standards of living and viability of the estate of today’s New Jersey household may well be an awareness of all of the various debt management options – from bankruptcy to such new potential solutions as debt settlement – and the empowerment that such knowledge brings. Every New Jersey consumer who continues to ignore their unsecured debt loads during times of hardship or setback is at great risk of losing their residence as well as their financial security for years to come through potential legal action, wage garnishment, seizure of checking and savings accounts, and, at the very least, eradication of positive credit ratings and FICO scores. Understandably, a failure to pay back the loans willfully taken out should quite obviously be the furthest thing from the minds of hardworking and trustworthy New Jersey consumers. In the same way, however, that none of us enjoy contemplating the inner workings of the Internal Revenue Service nor the system of taxation employed by the New Jersey legislature, but average consumers within our state still understand the fundamental underpinnings of the system and wouldn’t quite respect anyone that didn’t at least comprehend the basic ideas behind taxation and the arguable responsibility expected of each New Jersey citizen. Bankruptcy protection, on the other hand, remains for the ordinary New Jersey wage slave a shadowy labyrinthine series of governmental hurdles dripping with red tape and holding the potential for a lingering destruction of the unlucky filer’s credit report. While much of this presumption is not necessarily untrue – particularly given the grave mutations and ultimately neutered powers following the 2005 appearance of the Bankruptcy Abuse Prevention and Consumer Protection Act – your author will humbly submit that virtually no borrower in New Jersey who does not already possess some professional experience with the murky and ever less comprehensible worlds of consumer finance knows more than the most superficial data about bankruptcy protection in the modern age.
In the honest opinion of consumer finance specialists who’ve examined the New Jersey economy and the spending habits of its residents in particular, even those experts who deplore the wavering limitations of Chapter 7 debt liquidation bankruptcy would still be likely to advise New Jersey borrowers to seek some external assistance for their debt woes. Whether the household’s interested about the opportunities for relief of escalating financial burdens or already desperate for help in their struggles against mercenary predators and collection agents unwilling to listen to reason, an increased recognition of the state of bankruptcy protection could only aid the borrowers in their ultimate undertaking. The effects of that Bankruptcy Abuse Prevention and Consumer Protection Act, in particular, should be thoroughly studied before New Jersey borrowers spend dollar one upon filing the necessary paperwork or employing the assistance of bankruptcy attorneys. Believe it or not, many legal residents of New Jersey will find that they no longer even qualify for Chapter 7 debt elimination bankruptcies if they make more than the average income of New Jersey households. This figure will regularly change, of course, alongside the fluctuating fortunes of bread winners in our state, but, as things now stand, a single borrower would have to make less than fifty six thousand dollars, households with two members would have to make less than sixty four thousand dollars, households with three members would have to make less than eighty three thousand dollars, and so on. Once again, curious New Jersey families should look at the current figures offered by the United states Census Department to see at what levels the mathematical qualifications are currently set – one suspects the New Jersey earnings may well have fallen over the past year – but, should borrowers have done well financially in the first half of the year prior to filing for bankruptcy protection, they should remain aware of the possibility that the they won’t be considered legitimate applicants regardless of their fading income or mounting debt loads.
All residents of New Jersey that fail to be admitted to the Chapter 7 bankruptcy debt elimination – there’s a separate means test intended to help the needy borrowers who’ve yet demonstrated aberrant salary spikes, but the New Jersey court trustees have been rather loathe to utilize their powers in this way; special tests mean more work for a governmental system already over taxed – borrowers seeking bankruptcy protection will instead be shoved into the Chapter 13 debt re-structure program. To say the least, Chapter 13 protection isn’t exactly what most borrowers think of when they consider bankruptcy. All of the credit report devastation and associated costs are still present while debtors shall still have to repay the overwhelming majority of their unsecured holdings (and while obeying the strict budgets developed by the New Jersey court trustee who’s forced to rely upon state expenses handed down by the Internal Revenue Service). Honestly, since payments have to be handed in every month without fail and the household won’t likely be allowed sufficient disposable income to save for rainy days, most of the borrowers who end up even attempting the program find themselves having to default after one bad stretch because they couldn’t meet their obligations, and they end up even worse off than before they started down the road toward bankruptcy protection. Unless the New Jersey borrowers considering Chapter 13 protection are home owners utterly convinced that their primary residence shall be threatened with foreclosure – or, conversely, if they have some similar asset or excess savings that could be attached through law suits – Chapter 13 bankruptcies should be expressly avoided, and consumers who think that their original bankruptcy petition would likely lead the New Jersey court trustee to force Chapter 13 programs upon their household may be well advised to skip the bankruptcy declaration altogether.
Even if the New Jersey borrowers are (if one should use the term) lucky enough to prove that their earning levels are below the requested sums, the Chapter 7 debt elimination bankruptcy program maintains other, even most serious dangers, and, chief among these would be the forfeiture of the New Jersey household’s goods by the courts. This was always, to an extent, a major risk of debt liquidation bankruptcy, but, through a small yet still significant rewording of the language of the United States Bankruptcy Code just over four years ago, it’s even more likely that borrowers who wouldn’t think they would even boast any assets may still end up losing their dearest possessions to the court mandated auctioneer. The people of New Jersey have slightly less to fear in this department. The New Jersey state legislature, in response to the elevated threat of property seizure, enacted their own specific exemptions of which residents may choose to take advantage. While a complete listing of both exemption schedules would take several times the length of this article to fully explore, there are some elements that would be usefully illustrated within the limitations of this format. Once again, we have two separate slates of exemption – one offered by the federal government and one by the state of New Jersey – and, not to be overly dramatic, the selection of the exemptions used could very well determine the safety of everything that the New Jersey family currently owns.
The first round of exemptions offered by the United States government seems more specifically designed to appeal to younger borrowers living in New Jersey and families in particular. The homestead exemption guards primary residences (whether traditional stick built home or condominium or trailer) up to an equity value of twenty thousand dollars. Tools of trade, which could be anything from implementations of labor to appropriate clothing and uniforms to a relevant library, would be protected up to the same dollar value. Motor vehicles worth less than three thousand dollars, jewelry worth less than thirteen hundred dollars, and, independent of cost, any medical equipment proven to be necessary for the health of members of the New Jersey family will be protected. Borrowers also shouldn’t worry about any specific household item below five hundred dollars with a total cap around ten thousand dollars. There’s a separate grab bag exemption which vouchsafes another thousand dollars’ worth of various goods, and borrowers who have minimal equity may also utilize an additional ten thousand dollars not previously earmarked for the homestead. Married couples demonstrably living together get to invoke twice the amount of the federal exemptions as well. Life insurance proceeds for the head of household will be allowed without limit (dividends from accrued interest are set at ten thousand dollars), and borrowers needn’t concern themselves with alimony or child support payments, unclaimed income, pensions and other retirement benefits required for living expenses, most forms of public assistance like unemployment or workers’ compensation, social security funds, veterans benefits, funds arising from criminal trial judgments, and compensation for wrongful death (compensation for personal injury has a limit set at ten thousand dollars).
The New Jersey state exemptions are quite different, and it’s up to the individual household to determine whether or not they would be better served by the local statutes. Certainly, military personnel residing in New Jersey should want to employ the state guidelines since they’ll be guaranteed their entire salaries regardless of bankruptcy protection, and they’ll also be able to keep any proceeds from death benefits or disability relief (as would civil defense workers). Insurance payments and the benefits from fraternal societies and organizations should result in exemptions, benefits relating to age are unaffected (as are burial plots and similar cemetery related holdings), and the assets derived from business partnerships are also protected. However, aside from the uncapped clothing exception, the entirety of the New Jersey borrower’s household goods would only be vouchsafed to a thousand dollars’ value. For fashion conscious borrowers living in an otherwise Spartan studio apartment, this slate of exemptions may indeed be the way to go, but New Jersey families unwilling to let their precious heirlooms or family portraits fall to seizure by the county courts should find the potential far more risky. Frankly, before any New Jersey residents make their final decisions about either the choice of exemptions or even whether or not they should attempt Chapter 7 bankruptcy declaration, they probably spend the money to consult with bankruptcy attorneys who are experienced in New Jersey statutes as well as the federal code.
As should be expected, given the larger economic torrents sweeping through New Jersey as well as the rest of the United States, successful bankruptcy attorneys practiced in their field are in demand as never before, and, as happens whenever the need for professional services outstrips the immediate supply, these bankruptcy lawyers’ already extravagant fees have only gone up. For this reason, it’s of increased importance that the New Jersey borrowers look around at all of the different possibilities for debt liquidation. Debt consolidation, whether secured through home mortgages or offered by credit cards raising balances to accommodate competitors’ accounts, should quite rightly be dismissed as a method of procrastination and aid to compound interest while Consumer Credit Counseling solutions don’t do much more than structure payments in the manner of Chapter 13 bankruptcy with similarly destructive repercussions upon the borrowers’ credit reports. A surprising number of New Jersey debtors, however, have discovered the new program of debt settlement negotiation will not only immediately reduce credit card debts and similar unsecured burdens – excepting student loans; since there’s an implicit threat of Chapter 7 debt elimination should the lenders refuse to barter, only those debts potentially liquidated through bankruptcy protection would be affected – but also neatly position the New Jersey residents for a debt free future through education and tutelage upon proper budgetary procedure that does not unfairly tax household funds. As the program has grown in popularity, certified debt settlement specialists continue to open up for business within New Jersey cities and suburbs and, as has become increasingly common, through the internet where they would discuss the suitability of settlement negotiation with prospective clients over the telephone. For some desperate New Jersey borrowers, Chapter 7 or even Chapter 13 bankruptcy protection may remain the only tenable solution, but, before acting overly rashly, every resident of our state worried about consumer debt should at least give a glance to debt settlement negotiation’s potential.
The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.
Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?
