Personal Bankruptcy
Concerns about the consequences of filing personal bankruptcy leave so many Americans anxious that should they decide to declare bankruptcy they will end up with nothing. But that's not necessarily the case. Bankruptcy, in most cases, may be the best option - albeit a last resort for people who have severe unsecured debt because it will relieve a debtor of all or some of the debts they owe. Two major types of bankruptcy apply to individuals - Chapter 7 and Chapter 13. Chapter 7 bankruptcy, known as straight bankruptcy, involves liquidating all of a debtor's non-exempt assets and using the proceeds to pay off creditors.
To review debt relief alternatives to bankruptcy in Florida and to get a free debt relief analysis and savings estimate, simply answer a few online questions. It's free and there's no obligation.
Each state has different laws regarding the types of assets that are exempt and can be kept by the debtor. These exemptions may include your house, your car, any work-related tools, and some household furnishings. After any eligible assets have been liquidated and your creditors are paid off, you will not be responsible for paying back your unsecured debts. Keep in mind that filing for Chapter 7 bankruptcy won't wipe out certain types of debts - such as child support, alimony, student loans, and debts incurred as a result of fraud.
Chapter 13, on the other hand, will require you to repay all or part of your debt through a three- or five-year repayment plan that is approved by a federal court. The length of time is usually determined by your monthly income. Some people consider filing for Chapter 13 bankruptcy if they have enough income to make the court-required payments on their debts. Also, Chapter 13 stops the foreclosure process, so if you're behind on your mortgage, you can still keep your house and catch up on payments over time. Once you have made all the payments under the plan, you will be relieved of your debts. Note that both Chapter 7 and Chapter 13 bankruptcies are designed for individuals; for businesses that are unable to pay off their creditors, they may qualify for corporate bankruptcy. Also known as Chapter 11, a business can declare that it is unable to meet its obligations, and can seek protection from legal action by its creditors. That business will continue to operate under the direction of a court-appointed trustee that will reorganize the business to make it more efficient and in a position to pay back its creditors.
If you believe that filing personal bankruptcy may be your best bet towards rebuilding your financial future, you must first pass the bankruptcy means test to see if you qualify. Established by the U.S. government to make sure that consumers who can actually repay their debts did not abuse the bankruptcy system, the means test compares your monthly income against the state's median family income for a family your size. If your income exceeds the state's median, you may not be eligible to file Chapter 7 bankruptcy. If you fail, your petition may either be dismissed or converted to a Chapter 13 bankruptcy case.
For a review of debt relief alternatives to bankruptcy in Florida and to get a free debt relief analysis and savings estimate, simply answer a few questions online.
Personal bankruptcy laws are complex and often vary from state to state; recent statistics show that potential filers who first consult an attorney have a better rate of success because having an expert to guide them makes the process less traumatic and can help to minimize mistakes. Some people are fearful of the immediate consequence on their credit report once they file personal bankruptcy and rightly so, because filing for Chapter 7 bankruptcy stays on your credit report for up to 10 years. For Chapter 13, it stays on your credit report for seven. Aside from impacting your credit, filing for personal bankruptcy may result in higher interest rates on new loans and credit cards, and higher premiums on insurance and future big-ticket purchases.
However, in spite of these consequences, some people still turn to bankruptcy when they have considered all other options for getting debt relief options such as enrolling in a debt management plan, taking out a consolidation loan, or even debt settlement. But no matter what route you take - whether its filing personal bankruptcy or signing up for a debt reduction program consider all your options carefully. Weigh the benefits as well as the drawbacks. If you are in debt, the good news is, there are legal debt relief options that can help you get a fresh start and help to remove stress Take comfort that you are not alone and help is available.
To review debt relief alternatives to bankruptcy in Florida and to get a free debt relief analysis and savings estimate, simply answer a few online questions. It's free and there's no obligation.
