Florida residents dealing with sizable debt often don’t know where to turn. For some, there are practical solutions to alleviate the financial burden. However, others may not be so lucky and see no end in sight. In that case, bankruptcy might be the best option.
Things to consider first
Before filing for bankruptcy, consider other options. Credit counseling, debt management plans, debt consolidation and other forms of debt relief allow you to work with your creditors and repay a portion of what you owe. Some creditors may be willing to accept a lower amount and forgive interest.
When to declare bankruptcy
If alternative measures to alleviate your debt fail, bankruptcy might be the best route to take. You have the option of filing for Chapter 7 or Chapter 13 based on your income and assets. If you have very little income and assets, you may qualify for Chapter 7 through the means test; individuals who file for this type of bankruptcy typically cannot afford to repay all their debts.
Chapter 13 bankruptcy is ideal for those who are financially able to repay but need more time. If you qualify, your repayment plan is spread out over three to five years. Whichever form of bankruptcy you file, many unsecured debt balances are discharged; this includes credit card debt, medical bills, unsecured personal loans and, in some cases, student loans. Meanwhile, debts like certain back taxes, alimony, and child support don’t qualify.
If you file for Chapter 7 bankruptcy, a trustee is assigned to sell your non-exempt property so the proceeds can go toward repaying your creditors. You’re able to keep most of your property such as your vehicle, personal and household items and more. With Chapter 13, your debts are reorganized to make it easier to pay back your creditors.
Bankruptcy is often a good last resort. It could help you get a fresh financial start.
