There are some signs that may indicate a person’s debt level is more than he or she can currently manage. These may include the borrower spending more than his or her monthly income, using savings to cover expenses or receiving calls from collection agencies about delinquent accounts.
Credit counseling organizations may offer to develop a personalized plan for the borrower to manage debt. However, some of these agencies can charge high fees which only add to the borrower’s financial difficulties. It’s important for borrowers to understand the fees that they may be charged if they choose to use a credit counselor.
Some borrowers may also consider a debt management plan, which requires the borrower to deposit money each month with the credit counseling organization who then uses that money to pay debts like credit cards and other loans. These plans can take a long time to complete, sometimes 48 months or longer.
Borrowers should be wary of organizations who state that they can remove negative information from their credit report. Accurate negative information can stay on a borrower’s credit report from seven to ten years.
Bankruptcy options
It may be helpful for a borrower to contact an experienced bankruptcy attorney who can explain options available to them in Florida. There are two types of bankruptcy borrowers may want to consider.
Chapter 7 relieves individuals from many types of debt like credit cards, medical bills or other loans. It usually only takes a short time to complete.
Chapter 13 bankruptcy allows a borrower’s debt to be restructured and the borrower can make payments over three to five years. Homeowners sometimes also choose this option.
Each person’s circumstances are different. The past year has presented financial challenges for many people and borrowers should know that there is help available.
