Bankruptcy offers a number of benefits to individuals struggling with debt, but it is not without its consequences. In some cases, an alternative to bankruptcy may help you achieve your financial goals while minimizing the impact on your credit record. At Anidjar & Levine, our Hollywood bankruptcy lawyers can review your situation and discuss whether bankruptcy or an alternative is an appropriate option for you.Bankruptcy Considerations
If you are behind on your debt payments, filing for bankruptcy offers a number of protections that can help you get back on track financially. By filing for either Chapter 7 or Chapter 13, you will place an automatic stay on certain creditors’ debt collection, including wage garnishment and property seizure. Once you complete your bankruptcy and receive a discharge, you will have no further obligation to pay the remaining balance of any dischargeable debt, including credit card debt or medical bills.
Bankruptcy, however, does have several long-term implications. Consequences to consider include the potential loss of your assets. Depending on which type of bankruptcy you choose, you may lose some or all of your non-exempt property. Also, a bankruptcy can stay on your credit report for up to 10 years. It may adversely affect your efforts to get a loan. Lenders require that you wait a certain amount of time before applying for a mortgage or other loan. For example, the Federal Housing Administration requires that you wait two years after receiving a Chapter 7 discharge to apply for a loan, and one year after a Chapter 13 discharge.Alternative Paths to Explore
Bankruptcy alternatives may provide a more effective way for you to manage your debt while minimizing the risk to your property and credit. If you have a limited source of debt and have a stable income, a bankruptcy alternative may be a better option.
Bankruptcy alternatives you may want to consider include creditor negotiations. You can reach out to your creditors and negotiate a better repayment plan. This is effective if you have a limited amount of debt, have a stable income, and are willing to stick to a repayment plan.
Furthermore, you can ask your lender to modify the terms of an existing loan. By applying for a loan modification, you can lower your monthly payment, your interest rate, or both. Loan modifications are particularly effective if the main source of your debt is your mortgage. They are not as effective as bankruptcy if you are also dealing with other major debt, such as credit card debt or medical debt.
In another alternative, you can consolidate your loans into a single loan with more advantageous terms than any individual loan. For a consolidation loan to be more effective than bankruptcy, you should consider the monthly payment amount as well as the interest rate. A debt consolidation with a lower monthly payment and a lower interest is a viable option if you also have the financial means and willingness to stick to a new plan.
If you are a homeowner, you may borrow against the value of your home and pay off your other debt with a home equity loan. If you do not make timely payments on this loan, however, the lender may foreclose on your home.Discuss Your Financial Situation With Fort Lauderdale Lawyers
Deciding whether bankruptcy or an alternative is appropriate for you requires insight into both your financial circumstances and the law. The firm of Anidjar & Levine offers seasoned legal representation to South Florida residents. Our dedicated bankruptcy attorneys have handled numerous cases in Fort Lauderdale, Miami and nearby cities. Our lawyers will explore the details of your finances to help you arrive at a good choice for you. Call us at (800) 747-FREE to schedule an initial consultation, or you can complete the contact form on our website.