When you aren’t earning the income you expected, paying for student loans can be difficult — or even impossible. If you are facing this situation, you may be considering bankruptcy as an option for escaping from overwhelming debt. Many people start by searching, “Chapter 7 bankruptcy: the liquidation option,” but there are other bankruptcy paths you will want to consider before making a decision, such as Chapter 13 bankruptcy. Here is what you need to know about bankruptcy options in Florida and how they affect your student loans.
Chapter 7 Bankruptcy: The Liquidation Option
When you file for Chapter 7 bankruptcy in Florida, you are acknowledging that, given your finances, you will never successfully pay off your debts. The government offers this option to give you a fresh start, albeit with a bit of a head start. You get to keep a certain value of your assets, and then the remaining assets are sold to partially pay off your creditors. At the end of the process, you are generally debt free, but not always completely debt free.
Chapter 7 bankruptcy is a liquidation of your unexempt assets that eliminates most debt at the end of the process
Chapter 13 Bankruptcy: The Reorganization Option
Filing for Chapter 13 bankruptcy is different. Where Chapter 7 bankruptcy liquidates your unexempt assets, Chapter 13 bankruptcy reorganizes your debt. You generally pay a portion of your unsecured debt over 3 to 5 years. However, your payments usually significantly decrease. As long as you pay on time, at the end of the process you are generally debt free, even if the total amount you paid didn’t fully cover the amount of your debts. Many people choose Chapter 13 bankruptcy when they do not qualify for Chapter 7 bankruptcy, or need to pay over time to protect an asset they want to keep.
If you are drowning in debt due to student loans, bankruptcy may be the right choice for resolving that debt. My law firm helps clients understand and take advantage of their legal options to manage student loan debt. Contact me today at (407) 749-0080 to find out what options may be right for your situation.
Direct Comparison: Chapter 7 vs. Chapter 13 for Student Loans
Both Chapter 7 and Chapter 13 bankruptcy offer options to resolve debt and recover your finances. However, due to the different ways they approach debt, one may be better for you than the other. Perhaps the biggest advantage of Chapter 7 bankruptcy is that you won’t be repaying your most debt for years to come.
However, not all debts qualify to be discharged under Chapter 7 bankruptcy. Unfortunately, student loan debts often are not discharged in Chapter 7 proceedings. This means that you might still be liable for this debt even after declaring this bankruptcy. These payments may be easier to make, though, because your other debts have been discharged. Additionally, even if your student loan debts aren’t discharged, you will benefit from the automatic stay that occurs when you file for Chapter 7 bankruptcy. This prevents creditors from trying to collect from you while the legal proceedings are ongoing.
Conversely, Chapter 13 requires you to make payments on your debts for the next three to five years. When we design a Chapter 13 plan, the cost of those payments is calculated such that you can afford them. You may have a challenging few years, but at the end of the process, most of your debt will be discharged.
Factors to Consider When Choosing a Path
When deciding whether to file for Chapter 7 or Chapter 13, it’s important to take several factors into account. Typically, a key factor to consider is whether you are financially stable enough to submit to a payment plan.
The Importance of Seeking a Bankruptcy Lawyer in Florida
Bankruptcy is a complicated process. If you make a mistake while filing for bankruptcy, countless negatives impacts might occur. Hiring the right bankruptcy lawyer can protect you from these consequences.
At my law firm, the first thing I do is consult with you and discuss every aspect of your finances and your legal options. I want to determine what approach is best for securing your financial future and how to approach it. Once we know how to approach your case, I leverage my years of experience handling similar cases to make the process go as smoothly as possible. If you are pursuing Chapter 13 bankruptcy, I can put together a recommendation for the court on how to reorganize your debt.
The ultimate goal is to help you manage or even escape from the burden of your student loans. I never forget that fact while helping you with the bankruptcy process. If an approach won’t free you from that debt, I am ready to offer alternatives.
Contact Lewis Roberts, PA for Help from a Bankruptcy Lawyer in Florida
Student loan debt can feel like an anchor that will drag you down for the rest of your life. But with the right guidance, you can shed this anchor and face your future with confidence. Let me help you choose the best path for your situation.
Looking for the help you need to manage student loan debt in Florida for good? Contact my law firm as soon as possible at (407) 749-0080 to schedule a free consultation.
Attorney Lewis Roberts
The weight of debts that one cannot pay carries financial stress into every waking moment. It is time for this to end. Lewis Roberts, PA, offers solutions to relieve these worries. With over 20 years of experience in helping individuals overcome the burden of debt, bankruptcy attorney Lewis Roberts presents a range of options tailored to each unique situation. Clients can trust his advice on any matter related to debts, as he identifies appropriate options and explains the paths to debt relief clearly and carefully. This ensures that clients make the best decisions for their future. [ Attorney Bio ]
