One of the biggest challenges consumers face today is mounting debt. From credit cards to student loans to underwater mortgages, debts can stack up to the point where they become overwhelming. Some of these debts can be managed; we can learn to curb our spending via credit cards for example or refinance a mortgage under the HARP program. There are certain debts however that we can have little control over and those include medical debt. After all, few would argue that nothing is more important that our health, or the health of our loved ones.
Paying taxes on debts that are forgiven or cancelled is a concern on the minds of many people who come to my office for advice. They are worried about having to pay additional taxes as a result of resolving issues with their creditors. These tax questions can surface in short sales, debt consolidation arrangements, mortgage modifications, bankruptcy, or any transaction where the bank or creditor receives less than the amount originally owed.
What happens to your workers compensation settlement?
Filing for bankruptcy is an important decision, and there are many factors to consider. If you have received a workers compensation settlement as a result of a workers compensation claim, you may worry that filing for bankruptcy will cause you to lose this money. However, the State of Florida has protections in place specifically to exclude your workers compensation benefits and settlements from creditors’ claims.
Declaring bankruptcy is not a decision you should make without careful consideration. There are many factors to consider, and it isn’t an easy decision. There are several types available for individuals including chapter 7 and chapter 13 which are the most popular bankruptcies filed by individuals. If you have exhausted all your other avenues however, and you opt for this type of financial relief, you need to be aware of the stipulations required to discharge your bankruptcy.
For some people, filing a personal bankruptcy can provide the opportunity for them to reset their finances and give them hope for the future. It can provide a new chapter free from the debts that many times accrue through no fault of the debtor. A bankrptcy doesn’t mean a person is irresponsible; many times, unintended debts can pile up leaving few options. Medical emergencies, natural disasters with not enough insurance, and unforeseen home or car repairs are just a few of the ways unintended debts can pile up.