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The consumer debtor must qualify for the bankruptcy option

An experienced consumer bankruptcy attorney will always review a potential case to determine whether bankruptcy is the best alternative or whether another remedy will fit the client's situation better. There are many consumer situations that are not qualified for bankruptcy treatment, and in some cases, the amount of debt is insufficiently severe to call for a bankruptcy remedy. Generally, the same or similar factors are evaluated whether the case is to be filed in Florida or another federal bankruptcy jurisdiction.

If the individual or married couple are having preliminary financial problems that are not serious enough to file a bankruptcy, the attorney may find other options to resolve the problem with the creditor/s. For example, if one is behind only on the real estate mortgage and the shortage is not too many months in arrears, the attorney may be able to obtain a modification or other resolution with the mortgage lender. Letting the mortgage get too far behind will make it much more difficult to get a modification or forbearance agreement.

Unfortunately, the Home Affordable Mortgage Program (HAMP), initiated during the Obama administration, is set to end on December 31, 2016. That does not preclude a possible later application for modification, mainly because some lenders may continue to administer such programs without the formal HAMP rules being applied. In addition, mortgage lenders and other creditors have hardship programs for which the consumer may qualify.  

One of the keys in determining whether bankruptcy is the best alternative is obviously to look at the volume of debt and the consumer's ability to pay it off. As a general rule in Florida and elsewhere, if the debt load cannot be paid off in full within three to five years by making affordable monthly payments, it has likely become unmanageable. Because bankruptcy is the only remedy that allows the consumer to eliminate credit card and other unsecured debt fully and permanently without making payments, it can be a life-saving remedy for the individual or married couple who qualify for such relief.

Source:, "8 ways to avoid bad debts, bankruptcy court", Grace Schneider, Nov. 26, 2016

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