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Robert N. Heath, P.A.
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Non-bankruptcy ideas to clear financial challenges in Florida

The word bankruptcy is like a stop sign for many Floridians who have no interest in taking that step to clear their financial challenges. For many, bankruptcy is a viable alternative, but if a person wants to find another way to get out of debt, there are ways to do it without having to move forward with the personal and financial turmoil that often accompanies any form of bankruptcy. Having an idea of the options available is the first step.

Some people might have the chance to consolidate their debt. Because interest rates accrue with multiple credit cards and many people make little more than the minimum payments because of their financial situation, a consolidation can give them some room to get the debt down and reduce the interest. There are three common ways in which people can achieve this: a debt consolidation loan; transferring their debts to a lower interest credit card; or getting a home equity line of credit.

Another idea is to discuss a payment plan with creditors. If a creditor is confronted with the prospect of bankruptcy for the debtor and ending up with little to none of what they are owed, they might be willing to negotiate in variable ways including reducing the interest rates, writing down some of the debt or coming up with a strategy that is agreeable to all.

A legal professional might be able to help with a debt management plan. Creditors might agree to a repayment plan that is contingent on the income of the person and what they owe. The agency will receive the payment and then disburse the money to the creditors until the debts are repaid. There are negatives to this strategy as missing a payment might result in the termination of the agreement.

Finally, the debtor could simply default on what is owed. This might not seem like a palatable idea to a debtor who does not want to go through bankruptcy based on the feeling that it is shunning responsibility, but if the financial challenges are so hefty that they cannot pay the bills, defaulting is a choice they can consider. There are properties that are protected if the debtor does this including Social Security and public assistance. Debtors should be aware of the protections they are accorded by the Fair Debt Collection Practices Act regardless of how they attempt to get out of debt. A lawyer can assist with deciding on how best to move forward to clear debts without bankruptcy.

Source: findlaw.com, "Finding a Bankruptcy Alternative, accessed on Oct. 3, 2017

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