Not all of your debts can be eliminated by in bankruptcy. However, since the process is not a one-size-fits-all answer to debt issues, it’s essential for Florida residents to understand the details so they can plan their finances accordingly. Filing for bankruptcy can be a crucial step toward regaining your financial footing and starting your life over anew.
What does filing for bankruptcy mean?
Filing for bankruptcy is a legal tool that can provide a fresh financial start for people struggling with unmanageable debt. It allows individuals to discharge certain types of debts, such as credit card debts, medical bills, and other unsecured debts.
Types of bankruptcy
For individuals, the most relevant types of bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is the most common form of bankruptcy, and it allows you to completely eliminate certain types of unsecured debt, such as credit cards, medical bills, and personal loans. It also can eliminate certain types of secured debts, such as auto loans, as long as you are willing to give up the asset that is securing the debt. In addition, it can stop creditors from taking collection actions against you.
However, keep in mind that not all debts are eligible for discharge through Chapter 7 bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcy allows you to keep your assets and create a repayment plan for your debts. This repayment plan typically lasts three or five years and is based on your income and expenses. Once you complete the repayment plan, any remaining debt is eliminated.
Not all debts are eligible for discharge through Chapter 13 bankruptcy either, but it may be an option for some people who do not qualify for Chapter 7 bankruptcy.
While bankruptcy can take a large burden off your back, the following types of debt are not eliminated by the process:
- Legal fees and debt assigned in a divorce decree
- Child support and alimony
- Secured debt
Furthermore, filing for bankruptcy may or may not eliminate student loans and income tax liabilities you may have.
Weigh Your Options and Find Debt Relief
Though it may be discouraging to be in the position to file for bankruptcy, it’s crucial to realize that the option exists to help you get through difficult times.