Filing for bankruptcy in New Jersey can be a traumatic experience, but the greatest source of anxiety is often the unknown. What happens once the bankruptcy process is complete? How will you possibly be able to get back on your feet again? These are tough questions, and just the sort of issues people wrestle with every day across the nation in times of financial difficulty. The good news is that millions of people have been down this road before in New Jersey and elsewhere. Also, today, there is no shortage of valuable and substantial advice about what to do the day after your debt has been discharged.
First things first. There are certain things you should NOT expect in the wake of a New Jersey bankruptcy filing, and they will be welcome to anyone in your circumstances: you will no longer receive any calls, letters, or further contact from creditors of any kind. Once you file bankruptcy in New Jersey, creditors cannot take anything from you.
Understanding Chapter 7 and Chapter 13 Bankruptcy Filing
Bankruptcy is completed in a chapter 7 and 13 after the entry of the order of discharge. In a New Jersey Chapter 7 bankruptcy case, the order is entered after approximately four to five months. In a chapter 13 bankruptcy case in NJ, the order is entered about two months after the completion of the plan payments. After the completion, believe it or not, you will likely receive numerous credit card solicitations. The solicitations are from non mainstream lenders that provide extremely unfavorable credit terms. Typically, the charges and interest rates are exorbitant, with very low limits. Generally, this type of credit will not necessarily enhance your credit.
Bankruptcy’s Effect on Credit Scores
Typically an individual who is filing for bankruptcy has a low credit score and high debt. Bankruptcy reduces the credit score. However, the lower the score at the time of filing, the less bankruptcy will affect the score. Also, a high credit score is insignificant if the person has substantial debt. Would you provide a personal loan to someone who has a high credit score, but makes a $2,000.00 monthly payment towards credit cards, with a total credit debt of $70,000.00? Therefore, even with a high credit score, it will be difficult to obtain credit with substantial debt. Bankruptcy permits a person to eliminate or reduce their debt and start reestablishing their credit.
Reestablishing Credit
Initially, the only available credit will be low credit limits with higher interest rates. It will take time to reestablish your credit in New Jersey and obtain higher limits and lower rates. The individual must focus on saving money and reestablishing credit.
The present recession and the changing economy result in difficulty predicting the future of lenders’ habits regarding not only NJ bankruptcy debtors, but all of society. However, in general, clients are surprised as to how relatively easy it is to obtain credit after bankruptcy in New Jersey.
Remember, there are numerous lenders competing for your business. Creditors may contact you hoping to extend new lines of credit right away, although you should be weary of anyone who is hoping to rope you into an unreasonable APR simply because of the bankruptcy. An individual, who wishes to obtain an auto loan or mortgage, prior to substantially raising their credit score, will likely pay a higher interest rate. There are lenders that pursue people with less than excellent credit for the purpose of charging more in interest rates.
Financial advisers generally recommend beginning with one or two small, secured credit lines and building good habits and faith from there. You can also begin the process of repairing your credit manually by getting a copy of your report and correcting any lingering errors.
NJ Consumer Law Bankruptcy Lawyer
Bankruptcy in New Jersey is neither a dead end nor a badge of shame. Even in the world of FICO scores and credit reports, nothing lasts forever. Get your budget straight and you could find your score rising steadily in months. Give it a few years, and the bankruptcy itself may soon seem like a distant and irrelevant blemish. One of the surest ways to get started on the right foot is to speak with an experienced New Jersey bankruptcy attorney. If you have any questions regarding what to expect after filing bankruptcy, please contact the New Jersey bankruptcy lawyers at The Law Offices of Robert Manchel today for a free consultation on your case.