Debt Settlement: You Have to Pay for What You Keep

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Debt settlement. That’s why most people declare bankruptcy. They realize that they’ve gotten in over their heads and that they’re not going to be able to pay off the people they owe, so they file for bankruptcy as a way out. And a lot of people see this as a rather attractive way out because they read about the exemptions and see that they can keep their house and possibly their car as well.

But what a lot of people don’t realize—and this is yet another thing you need to know before filing—is that if you decide to hang onto those assets, you’re going to need to be able to find ways to continue paying for them.

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Debt Settlement: Houses and Cars Aren’t Free

As an Orlando bankruptcy attorney who’s worked with a lot of clients over the years, this one always surprises me. Some people out there think that if you declare bankruptcy, you can keep your house for free and not worry about paying for it anymore. This is completely and utterly false.

Debt settlements take care of things like credit cards, but if you decide to hang on to your home and you have a mortgage, the only way you keep it is by continuing to make those monthly payments. Miss one and your lender still has the same power to foreclose or take other action against you.

Keeping your car can be even trickier. Florida law allows you a $1,000 automobile exemption, but if your car is worth more than that—and chances are good that it is—you have to pay for every dollar over that amount. That means that keeping a car valued at $12,000 is going to cost you $11,000—and that’s not counting any car payments you may still have to make!

It’s important that people know this when considering bankruptcy as a form of debt settlement because it can greatly influence the decision, and I always recommend sitting down with an Orlando bankruptcy lawyer first to discuss your options.

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