Florida residents who are struggling with debt may feel like everything is a constant reminder of how much they owe. In some cases, they could be facing the threat of foreclosure or already be in a situation where wages are being garnished by creditors.
In these cases — or before it even gets to this point — now is a good time to talk about debt relief and the different options that may be available to get out of debt.
Debt consolidation is one option that many Florida residents may have heard of. With this, essentially, the idea is to take all debts and combine them into one. The positive to this is that instead of multiple payments to multiple creditors, there is just one monthly payment.
However, this is often not recommended as it could end up meaning collection actions if the debt consolidation loan is defaulted on. There are also quite a number of scams involving debt consolidation.
This is why those living with the threat of foreclosure and debt may be interested to learn more about Chapter 13 bankruptcy. With this type of bankruptcy, a repayment plan is created in order to pay back debts over a three to five year time period. This can also help a homeowner avoid foreclosure, as the bankruptcy puts an automatic stay on the foreclosure process. This gives the homeowner time to catch up on those missed mortgage payments.
However, in some cases, a person may simply have too much debt and not enough income to file for Chapter 13 bankruptcy. In these cases, Chapter 7 bankruptcy may be a better option.
With Chapter 7 bankruptcy, assets are typically liquidated in order to pay back what is owed. Many unsecured debts are discharged without having to make payments.
Of course, this is just a broad overview of different debt relief options. An attorney with experience handling these types of cases can go into more detail.
Source: Fox Business, “Choices for Debt Relief,” Fred O. Williams, Feb. 8, 2013