Bankruptcy laws exist to give U.S. citizens a second chance. Too often, the timing of a few unfortunate events can have devastating consequences. A person could lose their job then get injured in a car accident the next day — in many of these situations, bankruptcy is the only option.
Before filing for bankruptcy, individuals must meet with a financial counselor. These professionals examine one’s income, assets and spending to identify money-saving opportunities.
Credit counselors search for an individualized solution
People’s finances vary as much as their personalities. A one-size-fits-all solution does not exist for those considering bankruptcy. Financial counselors will help people find solutions for their money problems. Counselors may recommend the following alternatives to bankruptcy:
- Credit counseling: Credit counselors offer their services on a sliding scale due to their clients’ financial circumstances. Credit counseling can help people consolidate their credit card debt to reduce monthly payments at the lowest annual percentage rate (APR). Counselors will also explain the differences between debt management programs or debt settlement.
- Strict budgeting: Many people’s financial situations stem from poor budgeting and spending. Thankfully, people in these situations may find a solution in budgeting. A counselor can help examine income and spending to design a budget that may work. A temporary second job may be necessary to get ahead of debt.
- Debt settlement: Few creditors want their customers to have their debts wiped out with bankruptcy. Many would prefer to wait a little longer to get their money. A counselor can explore settling one’s debt with creditors to reduce monthly payments to manageable levels.
Counselors may recommend other options or custom-fit alternatives. If a solution is not viable, a counselor will recommend the bankruptcy process. A counselor will recommend filing for Chapter 7 or Chapter 13, depending on income and debt. Most people will use Chapter 7 to resolve their financial issues.
Bankruptcy is a complicated legal process
Bankruptcy law varies a bit in every state. Those looking to file bankruptcy can find more success working with a local attorney familiar with Florida bankruptcy law. A lawyer can recommend counselors, work with creditors and draft settlement paperwork.