Whether you’re going through challenging financial troubles or an unforeseen event has left you overwhelmed and unable to pay your debt, declaring bankruptcy can be a wise decision. But before deciding to file bankruptcy, you must consider the significant consequences of this action. Bankruptcy will eliminate most of your debt, but it can’t erase the results that go along with it. Find out the consequences of filing for bankruptcy in Florida.
1. Your Credit Score Will Be Affected
Your credit score is affected in two ways, the amount of debt being paid off and the amount of money owed to creditors. No matter how much your debt is reduced by bankruptcy, your credit score will be low compared to most people you know. It could make it harder for you to get loans in the future and purchase cars or home insurance. The maximum effect of bankruptcy will be about four years. Remember how long creditors will report unpaid debt when you have paid your debts and are rebuilding your credit. This will give you the knowledge to start rebuilding your credit sooner.
2. You May Lose Some Assets
Personal belongings of any value, including your home and car, may be subject to a creditor’s claim. While the court will consider your assets when deciding how much debt you are responsible for, you may have to sell assets or reduce expenses for your income to cover your necessities. At The Law Office of John E. Mufson, a bankruptcy attorney can help you determine the best way to deal with this type of loss. We can do so by providing you with affordable bankruptcy solutions that will allow you to continue your life without any loss of assets.
3. You May Have to Pay a Fee
You will also need to pay filing and possibly bankruptcy attorney fees. Both of these fees are paid by you but may still cost you thousands of dollars. This fee is typically waived if your income falls under this amount as long as your equity is over $10,000.
4. You May Not Be Able to Work
While you may want to pay off a debt that has become unmanageable, declaring bankruptcy will not help your financial situation. Once you have filed for bankruptcy, you will be unable to earn money or take extra hours without paying a high-income tax rate. If a person’s income falls below the filing limit, which is $161,400 for individuals or $315,800 for married couples, they will not be able to qualify for one of the three types of bankruptcy available for those who don’t have high incomes.
5. You May Not Be Able to Get Credit
Declaring bankruptcy can make it difficult to prove you are trustworthy and able to handle credit responsibly. Creditors are hesitant to extend any credit, even if you have been approved in the past. It is because bankruptcy will remain on your public record for up to 10 years. You may be able to start rebuilding your credit by getting a secured credit card or taking out a loan.
While declaring bankruptcy can be an intelligent decision, it’s essential to understand the consequences of this action. Contact The Law Office of John E. Mufson today to get a Boynton Beach Bankruptcy attorney experienced in filing for bankruptcy in Florida.