Many people from all walks of life struggle, including doctors, office workers, construction workers, and countless others. They all find themselves overwhelmed by debt. If you are one of them, you may worry about the consequences of bankruptcy, but Florida has specific and different rules when it comes to bankruptcy, including generous property exemptions to ensure that you likely will not lose everything when you file.
What is it?
Bankruptcy allows Miami residents and businesses to eliminate or restructure their debts under the protection of the federal bankruptcy court. Bankruptcy can offer relief to people who are unable to pay their bills and face constant harassment from creditors. Bankruptcy can also stop foreclosure, repossession, garnishment and utility shut-off.
Chapter 7 and Chapter 13 bankruptcy are the two most common types of bankruptcy individuals use. Chapter 7 involves selling your non-exempt assets to pay off some of your debts. Chapter 13 involves creating a repayment plan to pay back some or all of your debts over 3 to 5 years. The type of bankruptcy that is best for you depends on your income, assets, debts and goals.
What are the benefits?
Bankruptcy has both advantages and disadvantages that you should weigh carefully before filing. Some of the benefits of bankruptcy are that it can discharge most or all of your unsecured debts, such as credit cards, medical bills, personal loans and payday loans. This means that you will no longer be legally obligated to pay them back.
Bankruptcy can also stop creditor harassment, lawsuits, garnishments, foreclosures, repossessions and utility shut offs. This can give you peace of mind and a fresh start. It can protect some or all of your assets from being seized by creditors. Florida has generous exemptions that allow you to keep your homestead, car, personal property, retirement accounts and other assets up to a certain value.
Bankruptcy can improve your credit score in the long run. Although bankruptcy will stay on your credit report for up to 10 years, it can also help you rebuild your credit by reducing your debt-to-income ratio and allow you to start over with a clean slate.
What are the drawbacks?
Some of the drawbacks of bankruptcy are that bankruptcy can lower your credit score in the short term. This can make it harder for you to obtain new credit, loans or mortgages. It can affect your social reputation. Bankruptcy still carries a stigma in our society and some people may judge you negatively for filing. However, this should not deter you from seeking relief if you need it. Bankruptcy is a legal right that millions of Americans, including those right here in Miami, Florida, have used to overcome financial hardship.