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Miami Bankruptcy Law Blog

Debt relief: what to do when the bills pile up

Florida residents who have run into a streak of bad luck and find medical bills piling up may find themselves tempted to file for bankruptcy. According to USA Today, Americans choose bankruptcy most often as a result of outstanding healthcare expenses. When emergency surgeries or other unexpected crises impact financial well-being, what should families do?

The Federal Trade Commission offers some advice, encouraging individuals to be proactive about money matters. Being up front with creditors is the first step. While some may not be able to negotiate new payment arrangements, others likely can, so it is a good idea to let them know the moment bills begin to feel overwhelming.

What has and has not worked in bankruptcy reform?

It has been a while since bankruptcy laws have been reformed. This has provided enough time to analyze how the changes in the laws have worked out. Before filing for bankruptcy in Florida, you may want to look at what has worked and what has not worked with these new bankruptcy laws.

According to American Banker, the last main bankruptcy reform occurred in 2005. The main goal was to reduce the number of bankruptcies being filed and make it easier for people to find alternative options. The good news is the number of bankruptcies has went down, so the law worked in reaching its overall goal.

What is the bankruptcy counseling requirement?

If you are planning to file bankruptcy in Florida, it is essential to understand the federal bankruptcy laws that you must abide by. One of those rules is that you must complete credit counseling before you file and then after you file.

According to the Federal Trade Commission, the pre-filing counseling must be completed some time within the 180 days prior to filing your bankruptcy with the court. The program needs to include three main points. It should teach you about alternatives to bankruptcy, help you create a personal budget and evaluate your personal finances. It can be done in person, online or over the phone. 

What should you do when your rental property faces foreclosure?

As a landlord of a rental property in Florida, it is your responsibility to live up to your commitment to your tenants. This means ensuring they are secure in their home. While you may own the property, it is their home where they live and take care of their family. If you find yourself in financial trouble, it not only affects you but your renters as well. They are at risk of losing their home and may not even be aware of it.

Finding yourself facing foreclosure on a rental property is stressful, but imagine how your renters feel. The Landlord Protection Agency recommends taking steps to ensure you protect yourself and your renters if a foreclosure is a possibility. 

What are some debt consolidation options?

You have many options when it comes to trying to avoid bankruptcy in Florida. A common option is to consolidate your debts. This can be done with a company that specializes in this process or on your own. 

Credit Sesame notes debt consolidation with a debt consolidation company requires negotiations with your creditors to lower your bills and help you save money while also setting you up with an affordable payment plan. This process cannot help with a few types of debts because they are non-negotiable. It also will not eliminate or wipe out your debts as a bankruptcy does. You also have to pay a fee for the services. It can take a long time, and a major part of the process involves ruining your credit before starting to fix it by not paying your bills. 

When can wages be garnished?

One of the biggest concerns you may have when you are facing a lot of debt in Florida is having your wages garnished. This can be devastating because the chances are good that you are having trouble paying your bills with the money you are making and if garnished, you will not be bringing home even less money. It can throw you into even deeper debt. So, when can a debt collector garnish your wages?

The Consumer Financial Protection Bureau explains wage garnishment can only come after a court ruling. Creditors cannot on their own access your bank account and take money. The court must make a judgment that allows them to do so.

What is the danger of credit card debt?

Getting a credit card in Florida can make you feel secure like you have extra money if you need it. However, it is really easy to use the credit card for situations where you didn't need to spend money. Credit cards can lead you to live beyond your means. Eventually, all that debt catches up with you. 

One of the biggest issues with credit card debt, according to Time, is how much it costs. It can be tough to pay it down because of the high interest rates. So, why do people even get a credit card in the first place?

Can you keep your house in a Chapter 7 bankruptcy?

If you are having serious financial troubles and feel like you cannot get on top of your debt, then you may be considering bankruptcy. Taking this step, though, is serious. It can have far-reaching effects. You need to be aware of what will happen when you go to an Ohio bankruptcy court and how filing will affect your assets. This is especially true when it comes to your home. 

Many people wonder if they will lose their home if they file. According to the Ohio Bar Association, you may be able to keep your home if you file Chapter 7 bankruptcy, but it depends on your situation. 

What are your options for avoiding foreclosure?

The idea of losing your Florida home to a foreclosure can be scary. Essentially, the process kicks you out of your home and leaves you in a financial bind. It can be difficult to pick up and move on after a foreclosure. That is why it is often advisable to try to find an alternative that will allow you to avoid going through the process. 

Fannie Mae notes there are generally two main options you can take to avoid a foreclosure. This, of course, would be the options you have if you cannot pay up on your mortgage and get your account back in good standing. The options include a mortgage release or a short sale. 

Is it possible to get rid of students loans through bankruptcy?

If you are like many people in Florida, you have student loan debt. It is probably quite a large amount, too. If you are struggling financially, you may have even considered bankruptcy to relieve you of your debt. However, you were probably made aware that you cannot discharge student loan debt in a bankruptcy. While this is true for most people, you may be in the minority who can discharge student loans in bankruptcy. 

According to U.S. News & World Report, if you can prove your student loans cause you undue hardship, then you may be able to discharge them in a bankruptcy. There are no formal laws about how a court should determine if you meet the financial requirement. However, the common test used is called the Brunner test. 

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