Debts might cause tremendous financial problems for those unable to meet their obligations. A health crisis or job loss could leave a Florida resident struggling to deal with past-due bills and collection letters. Filing for bankruptcy might provide a way to solve the problem. However, there could be other options to try before seeking federal bankruptcy protection.
Ideas about dealing with debts and creditors
Those who owe money to creditors might find amicable ways to address their situation. Someone who owes a hospital for medical care may work out a long-term payment plan. The same might be an option for federal income tax arrearages.
Those struggling with paying loans could refinance their debt, if possible. Refinancing loans at lower interest rates might save the debtor money and speed up the timeframe to pay off the funds owed.
Others might work on debt settlement arrangements. A creditor might forgive a portion of the debt in exchange for a lump-sum settlement offer.
These alternatives to bankruptcy might not work when someone’s financial situation is dire. When it becomes apparent no debt payment strategy appears workable, declaring bankruptcy could provide a solution.
Filing for bankruptcy
When filing for bankruptcy, some explore their options for Chapter 7 and Chapter 13 bankruptcy. Chapter 7 involves liquidating assets to pay creditors, although some assets are exempt. Also, the debtor may find a significant amount of unsecured debts undergoes a discharge.
Filers have to pass the means test for Chapter 7 bankruptcy. Those who do not pass may test again later, or they could explore options for Chapter 13 bankruptcy. With Chapter 13, the debtor works out a three or five-year repayment plan on certain obligations. Some debt may end up being discharged.