If you are struggling with overwhelming debt, such as credit card debt or personal loans, one option is filing for bankruptcy. By doing so, you can wipe out your debts and receive a fresh start with your finances. The latest statistics show bankruptcy filings are up 16% year-over-year, which can be attributed in part to economic issues and persistent inflation.
While filing for bankruptcy can relieve you from your debts, it is not a step to be taken lightly. Be sure to ask yourself the following questions before filing for bankruptcy.
- Have I exhausted all my options? Thoroughly investigate alternatives or consider selling assets to pay off your debts. Alternatives, such as loan modifications and credit counseling, may provide a way to manage your debt and avoid some of the costs of filing for bankruptcy.
- What type of bankruptcy is most appropriate for my situation? There are different types of bankruptcy. For individuals, the options are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 involves liquidating your assets to pay off debts, while Chapter 13 establishes a repayment plan over a three-to-five-year period. Each has its own eligibility requirements, so understanding which type you qualify for is key.
- How will bankruptcy affect my credit score and for how long? Bankruptcy will have an impact on your credit score, potentially lowering it by 200 points or more. However, if your score is already low, perhaps due to high credit card balances or late payments, it may not drop that many points.
- Can I afford the costs associated with filing for bankruptcy? While it may seem counterintuitive, filing for bankruptcy isn’t free. It is a legal process that comes with costs. There are court filing fees and it is important to hire an experienced bankruptcy attorney to help you navigate the process.
- Will bankruptcy discharge all my debts? Not all debts can be discharged in bankruptcy. For example, federal student loans, most tax debt, alimony and child support payments cannot be discharged in bankruptcy.
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If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.