Should I File For Bankruptcy?
The decision to file for bankruptcy is not an easy one to make. To be sure, even if you understand the benefits of bankruptcy and are desperate for financial relief, you may also be wary about the potential consequences of filing for bankruptcy, such as losing your property or destroying your credit score. If you’re unsure about whether you should file for bankruptcy, here are some elements of a bankruptcy case that you should consider.
Your Level of Debt
One of the first things that you should think about when considering filing for bankruptcy is the level of debt you’re trying to manage. While there is no minimum amount of debt that you must have to file for bankruptcy, smaller amounts of debt may be more manageable without filing for bankruptcy.
The amount of debt you have may also affect the type of bankruptcy that you can file. For example, Chapter 13 bankruptcy has a maximum debt limit, which means that you cannot have more than a certain amount of debt to file. However, Chapter 13 bankruptcy also has several requirements that may affect your ability to file for it, creating a dilemma.
You should also consider the type of debt that you have. Some types of debts cannot be discharged in a bankruptcy filing, such as child support debts or student loan debts.
Alternatives to Bankruptcy Available to You
Bankruptcy should always be a last resort option; it is a serious legal and financial undertaking that has major consequences. As such, you should always consider other alternatives to bankruptcy available to you. Potential alternatives include:
- Negotiating with your creditors to settle debts;
- Working with a credit counseling agency;
- Refinancing a mortgage or restructuring loans;
- Liquidating assets; and
- Making serious lifestyle changes, including creating a budget and diligently tracking your expenses and spending.
The Effects of Bankruptcy
Before you file for bankruptcy, it is important to understand the effects that a bankruptcy filing will have on your life and your finances. Ignorantly, many people assume that filing for bankruptcy will provide them with financial relief, and that they will walk away post-filing without any long-term consequences. However, this is not the case. When you file for bankruptcy you may:
- Lose your assets/be required to pay back debts. Depending upon the type of bankruptcy you file for (Chapter 7 or Chapter 13), filing for bankruptcy may result in you losing your assets, including a home, or entering a payment plan to repay your debts.
- Negatively affect your credit score. Filing for bankruptcy is seriously damaging to a credit score, and it will take seven to 10 years for a bankruptcy filing to be removed from your credit report.
- Impair your ability to take out credit and loans in the future. If you file for bankruptcy, you can count on the fact that taking out loans in the future or opening a new line of credit will be very difficult. You may be unable to purchase a car or a home, open a new credit card, or take advantage of other lending programs until the bankruptcy filing has been cleared from your credit report.
Learn More About Filing for Bankruptcy in Florida
While filing for bankruptcy in Florida is a big decision that can have profound consequences, this is not to say that you shouldn’t file for bankruptcy; it means that you should consider all options and make sure you know what you’re getting yourself into. The best way to make an informed decision about filing for bankruptcy is to meet with a professional who can review your situation and provide you with unbiased advice.
At the law offices of Whibbs Stone Barnett, P.A., our lawyers know that filing for bankruptcy is a big decision. We can represent you throughout the process and help you understand filing requirements and all options available to you. To learn more, please visit our law office today, send us a message, or call us at 1-888-219-4561.