Example - Due to a prolonged illness, a debtor residing in New Jersey who has no medical insurance has incurred $50,00.00 in medical bills. All of the debtor's saving have been exhausted and the debtor has been unable to make mortgage payments for many months and is now threatened with foreclosure. The debtor has now returned to work and can begin making current mortgage payments, but has no means to pay the medical bill or the mortgage arrears. The debtor files a Chapter 13 Bankruptcy Petition and Plan which provides for repayment of the mortgage arrears over 60 months and payment of ten percent of the medical bills over the same period. Myth - Debtors Who File Bankruptcy Can Never Get Credit Again. This is a difficult myth to debunk because the myth appeals to our common sense. However, it has been our experience that many of those on whose behalf we filed bankruptcy have been able to reestablish their credit, obtain credit cards and purchase vehicles and homes. In fact, filing a bankruptcy may help debtors reestablish their credit. ... [Y]our creditreport is largely wiped clean when you declare bankruptcy. Your high balances are removed as are any late payments or records of unpaid debts. Instead, the accounts included in the bankruptcy will be marked as "Included in Chapter 7 Bankruptcy" or "Included in Chapter 13 Wage Earner Plan," John Ulzheimer, President of Credit.com Educational Services. Example - Chapter 7 Personal Bankruptcy discharges most debt and gives a debtor a clean slate and fresh start. This will enable timely payment current obligations by the debtor and the creation of a new credit history. Example - A Chapter 13 Bankruptcy Plan allows a homeowner to avoid foreclosure by making the current mortgage payments as they become due and paying the arrears through the Chapter 13 Plan. It has been our experience that timely payment of the mortgage and arrears have provided a basis for the extension to debtors of new credit. CAUTION: It must to be strongly emphasized that bankruptcy is not like vitamins - It is not good for everyone and not a miracle cure even for those who will benefit from the protection of the Bankruptcy Laws. Therefore a decision about whether it is in the interest of a debtor to seek bankruptcy protection and the type of bankruptcy to be filed should be made only after consultation with a bankruptcy lawyer. middlesex county office:770 Amboy AvenueEdison, NJ, 08837(888) 625-5564Get Directions hrunion county office:15 Alden St., Suite 3Cranford, NJ, 07016(888) 625-5564Get Directions hrSearch Our Blog:Search for: Recent Posts:Frequently Asked Question About the Bankruptcy Act of 2005 & Divorce, Support, Marital Property & Debt.Who Will Find Out If I File Bankruptcy ?Wage Garnishments Are Enforced On First Come First Serve BasisLoan Modifications and ForeclosureNews: New York Times Article Highlights Problems of Foreclosure and Loan ModificationSome Receipts Not Counted as Income in Chapter 7 or Chapter 13 Bankruptcy CasesArchive:Analysis & Comment Debt Collection News & Information Recent Decisions hrRelated postsUpdate on New Jersey Foreclosure Mediation and Bankruptcy DebtorsUpdate and Comment: New Jersey Foreclosure Mediation and Bankruptcy