If you can’t manage your debt in Miami, Florida, you have the option of bankruptcy. Bankruptcy discharges certain unsecured debts through liquidation in Chapter 7 or a repayment plan under Chapter 13. However, since bankruptcy can lower credit scores for a few years, you may want to seek alternatives first.
Alternatives to bankruptcy
If you are at least 90 days behind on one or two debts, consider negotiating with creditors on your own. However, don’t wait more than five months because many creditors turn debt over to third-party collectors at that point. If you don’t feel comfortable negotiating debt, you could look for a non-profit credit counseling agency to negotiate on your behalf.
For medical debt, ask about special financing programs for low incomes through your doctor or hospital. Another option is a zero or low interest balance transfer credit card, which sometimes gives first-time customers low rates. However, if you have a credit score below 549, you may not be able to get zero percent interest. Pay off the balance before the introductory offer ends, and read the fine print before accepting terms.
When to file for bankruptcy
Bankruptcy is not the right debt solution for all consumers. However, it may be the best option when:
- Creditors won’t negotiate the debt, even with professional debt services.
- You are behind on a mortgage, and it is underwater.
- You have several debts that exceed your asset liability.
- You have disposable income to pay but need more time.
The automatic stay is available in all types of bankruptcy to stop debt collections and foreclosures temporarily. It’s important to note that you must pass a means test in Chapter 7 to determine eligibility. If you have outstanding debts and multiple assets, consider filing Chapter 13 to avoid losing them.
Sometimes, if you have no assets, you can wait out the debt under the statutes of limitation. Bankruptcy is complex, so it is advisable to study all avenues before filing.