Do You Need to Complete Debt Relief Before Filing for Bankruptcy in NJ?

Filing for bankruptcy can be a daunting prospect, and some debtors might think a debt relief program is preferable. But is it necessary in New Jersey? Do you need to complete a debt relief program before you can file for bankruptcy?

You don’t need to complete a debt relief program before filing for bankruptcy in New Jersey. You can choose to do so, provided your creditors agree, but there are no guarantees that a program will allow you to tackle your debt in its entirety. There are many debt relief programs to choose from, each with different requirements and outcomes. If you decide your debt relief program isn’t beneficial, you can then file for bankruptcy. Generally, this is the best choice for many debtors, as bankruptcy is a legal process done in court that can help debtors regain their financial stability.

For a free evaluation of your case, contact the New Jersey bankruptcy lawyers at Young, Marr, Mallis & Associates by calling us today at 215-639-5297.

Is Completing a Debt Relief Program Necessary Before Filing for Bankruptcy in New Jersey?

Completing a debt relief program isn’t required before you can file for bankruptcy in New Jersey. However, engaging in alternative debt relief methods might help you avoid filing for bankruptcy if that interests you.

If you are dealing with overwhelming debt and are unsure what to do next, completing a debt relief program may allow you to restructure your debt and prevent bankruptcy. These programs can be completed out of court, between a debtor, our Cherry Hill, NJ bankruptcy lawyers, and a creditor. Depending on the type of debt relief program a creditor is willing to engage in, you might be able to reorganize your debt, reassess interest rates, or even erase a portion of your debt to make it more manageable.

Some companies offer debt relief services to debtors in New Jersey and claim to be capable of negotiating with creditors to reduce debt and avoid bankruptcy. Unfortunately, working with these companies might lead to futile negotiations with creditors and result in you owing more than you previously did. If you are interested in completing a debt relief program to organize your finances and make your debt more manageable, it is best to do so with our attorneys. Our lawyers have experience dealing with creditors, identifying which type of debt relief is best for debtors, and knowing when it is time to move forward with bankruptcy if a debt relief program is not progressing as it should.

Kinds of Debt Relief Programs You Can Complete in New Jersey

There are several kinds of debt relief programs debtors can engage in to better manage their finances and avoid additional problems. These programs vary substantially in procedure and outcome and might not be preferable to bankruptcy, depending on your situation,

A common type of debt relief in New Jersey is debt consolidation. This process involves consolidating unsecured debts, like credit card bills, resulting in a singular monthly payment. While this might make meeting your payments more manageable, debt consolidation might also prolong the amount of time you are in debt. Debt consolidation differs from debt settlement in that no debts are erased to help you repay creditors.

Credit counseling, another debt relief program, involves making a plan forward based on your current finances, debt, and income. With debt management, you may be able to negotiate a lower interest rate with creditors, although this is not always successful for debtors.

In a debt forgiveness relief program, creditors might agree to lower the amount you owe if you can pay a large lump-sum payment. That said, this option is rare as creditors typically want a return on all money lent to a debtor in New Jersey.

Many debt relief programs, from debt settlement to debt forgiveness, can have drawbacks. Creditors might decide they no longer want to complete a debt relief program, or debtors might realize that they are being misled. Consolidating debts in exchange for a lower interest rate might not have much impact on monthly payments, making debt no more manageable for debtors.

Will You Need to File for Bankruptcy After Completing a Debt Relief Program in New Jersey?

If you entered into a debt relief program and then determined you were not benefiting from that program, you can exit it and choose to file for bankruptcy in New Jersey. In reality, filing for bankruptcy from the get-go may be the best straight line to financial security for debtors, rather than completing a debt relief program.

Debt relief programs are not always entirely successful. Even if you have been able to repay some of the debt you owe via a debt relief program, you might still be struggling. Our attorneys can assess the details of your debt relief program to determine if it is actually beneficial to you. If not, we can help you file for either Chapter 7 or Chapter 13 bankruptcy in New Jersey, depending on your income and other financial information.

Debtors engaged in debt relief programs are not prevented from filing for bankruptcy in New Jersey. Based on the type of bankruptcy you file for, you may be able to address all of your debt sooner than you would have in a debt relief program. For example, Chapter 7 bankruptcy, which involves liquidating a debtor’s assets, takes an average of four to six months to complete. It may be several years into a debt relief program that you realize you are not gaining traction or that a creditor changes their mind about their participation. While Chapter 13 bankruptcy can take a few years, it provides a clear path forward that is approved by our attorneys, creditors, and the court, making it a preferable choice to many debtors over engaging in debt relief programs that can’t offer the same security.

Ask Our New Jersey Attorneys About Debt Relief Through Bankruptcy

For a free evaluation of your case, reach out to our East Brunswick bankruptcy lawyers at Young, Marr, Mallis & Associates by calling us today at 215-639-5297.