If you are behind on your credit card payments, one of the options may be to use bankruptcy to resolve those debts. This can be an excellent choice if you don’t have enough income coming in to pay down what you owe or you’re unable to work out a new payment plan or settlement with the credit card company.
There are a few things you should know about bankruptcy, though. First, bankruptcy is likely to damage your credit score significantly. That means that you most likely won’t be able to get credit in the future, which could hurt your ability to buy a car or home. You may also find that it’s more difficult to find an apartment or rental because of the bankruptcy on your record.
Another thing to consider is that there are two kinds of bankruptcy, and you may not qualify for the one you want. Chapter 7 bankruptcy requires you to meet a means test showing that you cannot afford to pay back what you owe. It also asks that you liquidate any nonexempt assets. Chapter 13 bankruptcy sets you up on a payment plan for the next three to five years based on your income.
What is Loss Mitigation Mediation?
In the Southern District of Florida, loss mitigation mediation can be used by those in Chapter 13 bankruptcy. This may be something to look into if you have a mortgage that you want to modify to make it easier to pay back other debts. In some cases, this may strip your property of a second mortgage if it’s underwater. This may help you have more money on hand to pay down your credit cards as a part of the payment plan.
Bankruptcy isn’t for everyone, but if you’re interested in resolving your debts and can’t find another way to negotiate them away or pay them off over time, then it might be time to consider it. Bankruptcy has the potential to give you a fresh start, so that you can get your finances into a better place, rely less on credit and move forward with more financial security.