If you’re struggling with old debts that never seem to get any smaller,
you’re probably familiar with endless bills, creditor phone calls,
and the overwhelming feeling of not knowing where to turn for relief.
You may be wondering if
bankruptcy is the right option for you, and have several questions about what it
is, how it will affect your credit, and what kinds of debts it can eliminate.
While bankruptcy is certainly a great way for many people to regain their
financial freedom, it is not a decision that should be entered into lightly
and is not ideal for everyone.
Am I Eligible for Bankruptcy?
There are certain eligibility requirements to file for bankruptcy. For
example, you may not be able to file for Chapter 7 bankruptcy if you have
enough income to repay your debts under a Chapter 13 plan. Alternatively,
you may not be eligible to file under Chapter 13 if your income is too
low or your debts are too high. It is important to go over your specific
financial situation with an attorney to determine which option will work
best for you.
Types of Bankruptcy
The two main kinds of bankruptcy for individual filers are:
Chapter 7: A relatively short process in which many, if not all, consumer debts
are typically discharged (cancelled) within three to six months.
Chapter 13: A process in which the filer pays back all, or a portion of, their debts
over a three- to five-year period based on their income.
One important consideration is how bankruptcy will affect your home. One
of the benefits of Chapter 13 bankruptcy is that it can stop a mortgage
foreclosure, providing the filer makes up their missed payments throughout
the course of their plan while staying current with regular monthly payments.
It can also allow the filer to keep nonexempt property because they will
be using income to repay their debts. Under Chapter 7 bankruptcy, on the
other hand, there is a chance that the filer’s home, car, or other
property could be sold to pay back creditors if it has sufficient equity.
However, debtors who do not have significant equity in their homes will
likely be able to keep their homes.
Will Bankruptcy Cancel All of My Debts?
Although bankruptcy can eliminate most debt, there are some types of debt
that are not eligible for a discharge. Generally, credit card debt and
other unsecured debt is dischargeable under both Chapter 7 and 13.
However, a filer will still be responsible for the following types of debt:
- Child support
- Student loan debt
- Most tax debts
- Fines and penalties (i.e. traffic tickets, restitution payments, etc.)
- Secured debts (i.e. mortgage debt, car loans, etc.)
It is also important to note that bankruptcy won't stop a secured creditor
from repossessing property. While a bankruptcy discharge will eliminate
a debt, it won't eliminate a lien.
Furthermore, you should be aware that either type of bankruptcy will have
a negative effect on your credit score for up to 10 years. However, there
are steps you can take to rebuild your score over time.
Talk About Your Case with a Jacksonville Bankruptcy Attorney
If you are considering bankruptcy as a way to regain control of your financial
situation, we encourage you to contact Owenby Law, P.A. Our skilled Jacksonville
bankruptcy lawyers are prepared to review your unique situation and inform
you of your best options for relief. Debt doesn’t have to control
your life – allow our experienced team to help you start over with
a clean slate!
To schedule your
free initial debt relief consultation, call our office at (904) 770-3141.