Filing for Bankruptcy Is Less Scary Than Defaulting on a Debt
What do you do when you cannot afford to repay a debt? All of your options fall into one of two categories, namely running away from the debt or confronting it. It is not possible to wish a debt out of existence. You cannot retcon your financial history to where you never promised to pay the money in the first place. If you disagree with the creditor about whether you owe the money, the one to make the final decision about the matter is a judge. Lawsuits over unpaid debts are fairly common, but they are not pretty, especially when the defendant is an individual who cannot pay the debt because he or she has so many other legitimate personal expenses, such as paying for housing or groceries. In bankruptcy cases, the court also officially declares the borrower free of some of his or her unpaid debts, provided that the borrower meets certain obligations. It is even possible for creditors and borrowers to negotiate with each other outside of court to settle the debt for less than the original amount. If your debts have been keeping you awake at night and you are ready to face them by the light of day, contact a Plantation chapter 7 bankruptcy lawyer.
Defaulting on a Debt Does Not Make It Go Away
Defaulting on a debt is when the borrower stops making payments on the debt for such a long time that the nonpayment constitutes an irreparable breach of the loan agreement. Once the borrower defaults, it does not mean that the creditor stops trying to collect payment. The statute of limitations is several years, and during that time, the creditor can sue the borrower over the debt. If the court rules against you and orders you to pay, you cannot discharge that obligation in bankruptcy. In some cases, the creditor can even petition the court to garnish your paychecks to send installment payments to the creditor until the debt is repaid.
Filing for Bankruptcy Means Playing the Long Game
Filing for bankruptcy means that you will have to pay some legal fees and prepare a lot of paperwork, but in the end, it is a better solution than defaulting on your debts. If you work with a bankruptcy lawyer, you will be able to get the maximum debt relief from your bankruptcy filing. Most people who file for chapter 7 bankruptcy do not have to sell any of their assets to satisfy their obligations to the bankruptcy court. Bankruptcy filings and defaults on debts both lower your credit score, but it is much easier to recover from a bankruptcy filing than it is from a default.
Work With a Debt Lawyer About Difficult Financial Decisions
It is hard to think clearly about your financial future when you are struggling with unpayable debts. A South Florida debt lawyer can help you decide between bankruptcy and other debt settlement or debt consolidation options. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.
Source:
bankrate.com/personal-finance/debt/walking-away-from-debt-vs-filing-bankruptcy/
