The Benefits of a Timely Bankruptcy Filing

An individual may spend two years or more in what is called the financial sweatbox. This is a time in which you try to pay your bills without the financial resources to do so effectively. Spending too much time in that sweatbox could result in financial instability even after filing for bankruptcy. Contact a New Jersey bankruptcy lawyer with questions if you need to declare bankruptcy.

When Should You File for Bankruptcy?

Ideally, you will strongly consider filing for bankruptcy the first time that you receive a call from a collection agency. When a debt collector calls, it means that your original creditor has charged off the balance you owe. Generally, this doesn’t happen until a debt balance is 90 days or more past due.

At this point, there may be few benefits to your bank account or your credit score if you decide to negotiate with the debt collector. Instead, it may be easier to file for bankruptcy and attempt to get that past-due balance discharged.

Retirement Assets Can Be Protected in Bankruptcy

For the most part, funds that are in an IRA or a 401(k) are exempt from creditors in a bankruptcy case. Therefore, it may be best for you to file for bankruptcy as opposed to taking a loan from a 401(k) or a withdrawal from an IRA to pay any past-due debt balances. It is also important to note that taking funds out of a retirement account means that you lose out on the future compounding of your current balance.

This means that you could harm yourself financially today and later in life when it comes time to retire. A New Jersey bankruptcy attorney may be able to help you learn more about what could happen to your retirement assets in a bankruptcy case.

Can You Put Food on the Table?

If you have to choose between putting food on the table and making a debt payment, it is time to consider filing for bankruptcy. As a general rule, you should look into the bankruptcy process if more than half of your income is going toward debt payments. You should also consider protection from creditors if you can’t buy food, pay for medicine or meet any other basic needs. In cases where you are experiencing an extreme hardship, a bankruptcy court may allow you to discharge priority debts such as student loan balances.

Do You Have Savings or Other Tangible Assets?

In the event that you don’t own a home, car or other significant asset, it may be in your best interest to file for bankruptcy to get rid of your current debt load. The same may be true if you don’t have any significant savings. This is because you likely qualify for Chapter 7 bankruptcy, which allows unsecured debts to be discharged without paying creditors anything. In some cases, you will be allowed to retain equity in your home even if you ultimately forfeit the property to creditors. Typically, Chapter 7 cases can be resolved in a matter of weeks or months.

Do You Have Any Other Options?

It should be noted that bankruptcy is generally seen as an option of last resort when it comes to seeking debt relief. In other words, it may be a good idea to look into debt consolidation or renegotiating the terms of a secured loan prior to filing. However, the second that you think creditors won’t renegotiate the terms of a loan, it may be best to file for bankruptcy protection. At that point, you may be throwing money at a loan balance that won’t be repaid for many years to come.

If you are need of a New Jersey bankruptcy attorney, contact the firm of Neuner & Ventura LLP today. Our law office is located in the Willow Ridge Executive Office Park in Marlton, New Jersey. You can also choose to give us a call at (856) 596-2828 during normal business hours to learn more about how we can be of assistance to you.