What you should know about bankruptcy
Florida consumers often consider filing for bankruptcy If they have been struggling with a lot of debt. While this option isn’t right for everyone, many people find that it is the most efficient way to deal with problematic debt and to seek a fresh financial start.
Before filing for bankruptcy, there are a few things that debtors should be aware of. The first is that there is more than one type of bankruptcy. For individuals and couples, Chapter 7 and Chapter 13 bankruptcy are the most common. The choice depends on a variety of factors including eligibility requirements.
Under Chapter 7, a filer’s non-exempt assets are liquidated by the trustee and the proceeds are used to make payments to creditors. After the liquidation and payment, many of the remaining unsecured balances are discharged. In a Chapter 13 bankruptcy, the debtor can keep his or her property but must agree to enter into a three- or five-year debt repayment plan. After completing the plan, much of the remaining unsecured debt is discharged. Another thing that debtors should be aware of is that not all debt is dischargeable in bankruptcy. Alimony and child support, for example, are never dischargeable. Student loans can sometimes be discharged, but there are a few hurdles to overcome. Finally, debtors should be aware of the potential for damage to their credit scores. While it is true that credit damage lessens over time, credit scores can take a significant hit at the outset.
People who are overwhelmed by their financial obligations may benefit from speaking with an experienced lawyer. Bankruptcy is just one of several debt relief alternatives that might be available.