Substituting Bankruptcy For Other Options: Is It Viable?

What Are The Alternatives To Filing For Chapter 7 Or Chapter 13 Bankruptcy?

Bankruptcy is the most effective solution for debt relief available for most people. However, many people want to do whatever they can to avoid calling a bankruptcy attorney. Some try to avoid it because of the stigma associated with bankruptcy, thinking that others will judge them for it or that it somehow indicates a personal failing. Others avoid it because they are worried about how bankruptcy will impact them in the long term, such as by bringing down their credit score or making it difficult to buy a new home.

The truth is often the opposite of what people think about bankruptcy. The truth is that bankruptcy is a legal right for those who qualify, and it is one of the best ways for many to get debt relief. Many people have to file bankruptcy because they lost a job, became seriously ill or injured, or were just led astray by credit card companies or predatory lenders – not because they were bad people. Filing for bankruptcy can also help you to restore your credit more quickly, by giving you fast debt relief instead of you continuing to struggle with debt that you can’t pay.

Still, if you feel like you want to try out alternatives to bankruptcy before you call a bankruptcy attorney, these are some common options:

Creditor Negotiation

Many people who are considering bankruptcy are struggling with credit card debt. It’s no surprise – credit cards are easy to get, and they come with sky-high interest rates. It’s those interest rates that make it so hard for you to pay them off. You might try to make your debt more manageable by calling your credit card companies directly and try to negotiate better rates with them. Sometimes, the companies will agree if they think that you aren’t going to be able to pay otherwise. But most will refuse.

Your other option for negotiating will be to offer a lump sum to settle your account. Again, many credit card companies are going to refuse. They are going to try to get the full amount owed whenever possible. If you have enough to offer a lump sum, chances are good that the company will think you have enough to pay the full amount, even if not immediately.

Work With a Consumer Credit Counseling Agency

Sometimes, you may not have any luck negotiating with credit card companies yourself, but you may be more successful if you are working with a credit counseling agency. The companies know that if you are at the point where you want to work with an agency that you are struggling, so they may be more willing to negotiate.

Know that this will not always be true. Credit counseling agencies do not always get results, and they can also charge fees. If you file for Chapter 7 bankruptcy instead, you can get all your unsecured debt discharged and pay nothing. If you file for Chapter 13 bankruptcy, you’ll achieve the same results as the credit counseling agency would try to get for you, but you’ll end up with better terms and you won’t have to pay the agency on top of it.

Attempt a Debt Settlement

If your debt is very delinquent, your creditors may be willing to agree to a debt settlement in which you pay off your debt over a longer period of time. They may even agree to adjust the terms, such as lowering the overall amount you owe, lowering the monthly payment, or lowering the interest. But, again, it is not that often that companies will agree to this since their goal will be to get all the money they can. If you have secured debts, they also know they can still seize your assets to satisfy the debt.

Filing for Chapter 13 bankruptcy is essentially entering into a debt settlement – without asking for your creditors’ permission or doing it on their terms. Instead, the bankruptcy court decides what you can afford to pay and sets the terms. You may even be able to have some debt discharged when the repayment plan is completed.

While you may have options for debt relief besides bankruptcy, you will quickly learn that most of them will not work out or that they will not provide you the same debt relief that bankruptcy will. Certainly, look into these options, but also talk to a reputable bankruptcy lawyer. You will likely find that bankruptcy will offer you more comprehensive debt relief and more quickly.

Contact Arizona’s Leading Bankruptcy Attorneys

Call My AZ Lawyers today to talk with a bankruptcy attorney about how bankruptcy can help you get the debt relief you need. We help clients get debt relief through both Chapter 7 bankruptcy and Chapter 13 bankruptcy. We’ll help you understand which will give you the most benefits based on your financial circumstances. We represent clients in Mesa, Glendale, Tucson, and the Phoenix areas. Contact us today to met with a bankruptcy attorney and learn more.