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Boca Raton Debt Relief Blog

Bankruptcy is the best choice when debt is overwhelming

Florida residents are building up excessive credit card debt consistent along with the rest of the country. When repaying debt, there are some options for making smart repayment choices that should be heeded. However, if the debt is so overwhelming that it cannot be paid off comfortably within the next five years, the borrower may be best off filing for bankruptcy relief.                                                                                                                             

There are some tips for paying off debts correctly, but do not get too excited. If one does not have sufficient income, the suggestions will have little effect. The secret to these techniques is in having money left over each month after paying the minimum amounts due on existing debts.

Bankruptcy does not mean that the credit score cannot be repaired

About 500,000 Americans file for personal bankruptcy relief each year, including a fair share here in Florida. With overwhelming credit card debt and medical bills, they take advantage of the one remedy that does not require a payment plan. The Chapter 7 Bankruptcy may be a dramatic help to those with heaping amounts of unsecured debt because the debt is erased permanently and quickly in the proceeding.

The one drawback, however, that many express about this powerful remedy is the negative effect that it has on one's credit score. A bankruptcy will make one's score plunge after the papers are filed. However, the plummet may be not so great if the consumer already is plagued by charge-offs and defaulted credit card accounts. At that point, there is nowhere to go but up.

The best solution to crushing credit card debt may be bankruptcy

In Florida and elsewhere, it is easy for an individual or married couple to get carried away with credit card debt. At first, it seems quite easy to settle back, make purchases and then just pay the minimum amount each month. It is also easy to ask for additional credit cards, especially where no payments have been late or missed. However, this may lead to a spiral that is nearly impossible to stop, and when it goes into runaway mode, a bankruptcy may be the only answer that makes any sense.

The first thing to do when one realizes that there is a growing problem is to put on the brakes and stop spending. Most of what people think they must buy they really don't need to buy. People find that they can in fact reign in their spending when financial matters have approached or reached a point of crisis. The next thing to do is to make a budget.

Chapter 13 bankruptcy offers a way to keep the family residence

Most individuals and married couples in Florida who are struggling with overwhelming debt will likely benefit most from filing a Chapter 7 bankruptcy because it gives swift and permanent relief regarding all unsecured debt such as credit cards and medical bills. However, in special circumstances where a house mortgage or car loans are behind, the home and/or the cars can sometimes be saved by filing a wage earner's payment plan called a Chapter 13. In that kind of bankruptcy, the mortgage or car payment will be paid on time every month and a partial payment will be made monthly to get the arrearages on the loan current.

The filer is allowed to construct a payment plan that extends from three to five years. The payment schedule is set forth in the wage earner's Chapter 13 plan, which will show that all secured accounts will be up-to-date and current by the end of the payment plan. Unsecured bills that have not been fully paid in the Chapter 13 at the end of the plan, are generally discharged and wiped out by law.

Bankruptcy can save the peace of mind of many elderly persons

There are reasons why many older people have been filing for bankruptcy relief in Florida and in other states. It easy to see that it has become much more difficult to survive on a Social Security check. For many, working that extra job to supplement the monthly stipend from the government becomes less and less feasible the older they get. And for others, the financial pressure may boil over and call for filing a bankruptcy to get a fresh start.

Older people are riddled with medical expenses that Medicare does not cover. For those living solely on a Social Security check, the abrupt change of having less income available parlays into potential trouble if even just one or two credit cards are allowed to escalate to their limit. Fortunately, both medical bills and credit card debt can be eradicated quickly and permanently in a Chapter 7 bankruptcy provided under the auspices of the federal bankruptcy court.

Debt restructuring may help consumers resolve their debt loads

Debt management and restructuring programs are available in Florida and for those who reside elsewhere. There are a variety of programs designed to manage and pay one's unsecured debt that has built up to unmanageable proportions. Debt restructuring and management methods are not always successful, however, and if one's debt load has reached a certain point of no return, it may be necessary to file bankruptcy as the option of choice.

One should research thoroughly before signing up with a particular debt relief program. Check the organization with the Better Business Bureau and make sure that it has not been involved in any type of official investigation or disciplinary action. Some companies do not place their ethical commitments to their clients as their highest priorities. Do not sign up for a company's services if it asks for a large down payment prior to doing any work; that is a sure sign that something is amiss, and that there may be a negative outcome to the experience.

Bankruptcy may be a life-saving remedy against payday loans

Many consumers in Florida and elsewhere get into financial trouble by relying on the failure-driven cycle of expensive and predatory payday and car-title loans. These transactions rest on a platform of extremely high-cost financing rates, making the loan payments egregiously high and necessitating re-borrowing when the short-term payday ultimatum becomes due. When this kind of debt spirals out of control, which may even be combined with high-cost credit card debt, the consumer must often decide whether bankruptcy should be considered to put the destructive cycle to rest.

The federal Consumer Financial Protection Bureau is a consumer watchdog agency established through federal legislation passed during the financial crises that mushroomed in 2007 and 2008. The agency announced early in October that it is issuing a new rule to limit the impact and vice-like grip that the payday and car-title lenders have been exerting over hapless consumers. The rule is the result of five years of hearings, town hall meetings, research data and public comments.

Consult with a consumer bankruptcy attorney for Chapter choice

When considering bankruptcy in Florida, it is important to seek the services of an experienced consumer bankruptcy attorney. That person will be interested in getting a discharge of the consumer's unsecured debts quickly and permanently when possible in a bankruptcy filing. Although the legal fee for a Chapter 7 must be paid prior to filing, it is often the best solution for consumers swimming in overwhelming unsecured debt.

Recent studies show that there is a practice that is gaining prevalence where the system seems to encourage filing a Chapter 13, which is a payment plan. This type of bankruptcy is not mandatory, however, and it only works when there is a home to be saved through monthly payments. It may work where there is an unusually high tax bill or other kind of secured or priority debt.

Bankruptcy may be the best remedy to erase crippling debt

Florida and all other states offer access to the federal bankruptcy remedy as a way to eliminate debt in a rapid and permanent fashion. It is not always the best way to go, which is a subject best discussed with an experienced consumer bankruptcy attorney. There are some signposts, however, that can guide consumers to know whether they will benefit most from filing a bankruptcy to resolve their debt problems.

One way to identify the need for bankruptcy relief is to take a look at one's total debt load. For example, if the consumer's credit card debt equals or exceeds one-half of monthly income, an appointment to discuss bankruptcy is a wise decision. It will be a harrowing battle to try and overcome one's debt balance that is so restrictively high. In fact, without an immediate and drastic increase in income, it just can't be done.

Bankruptcy filing is warranted in cases of overwhelming debt

Despite the potential drawbacks of filing a consumer bankruptcy, there are many instances where it is the best option that a struggling individual or married couple residing in Florida may choose. That is especially true where the burden of the debt is overwhelming and would take longer than just a few years to pay in full or even partially. Education and experience qualify consumer bankruptcy attorneys to forthrightly advise potential clients whether they are qualified to file and whether they have better options.

A free consultation with a consumer bankruptcy attorney allows consumers to learn all the positive and negative impacts of a bankruptcy, and importantly, they can get their questions and concerns fully explained and clarified. Some of the positive reasons to file include the important goal of getting the family back on track, dispensing with years of worry and outside pressure and the emotional relief of starting over with a clean slate. The last point is critical because no other option or program gives a consumer the legal right to eliminate 100 percent of all unsecured debt quickly and forever.

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