What options can I consider before filing bankruptcy?
On behalf of Furr & Cohen, P.A. posted in chapter 7 on Saturday, April 9, 2016.
Filing for bankruptcy protection is not something that people take lightly. It is an aggressive solution for a serious problem, and while it can be very effective, it is not without some consequences.
Because of this, many people prefer to exhaust their other options before deciding to file bankruptcy. Some of these options are better than others. For example, ignoring your debt or hoping it goes away on its own or with minimal effort from you is generally not a good idea. Working with your creditors to pursue alternative repayment options, on the other hand, can be a much better solution.
Before you file for bankruptcy, it can be a wise move to actually discuss your situation with the creditors to whom you are in debt. Many people avoid this out of fear or because they assume their creditors want nothing but full repayment. This is not always true.
In fact, creditors often agree to alternative repayment plans so they can keep you paying money. Even if it takes you longer or you end up paying less than you owe, creditors may prefer this to having the debt discharged through Chapter 7 or other types of bankruptcy.
Alternatives that can certainly be worth exploring include workouts that ultimately give you some flexibility when repaying debt. You may be able to negotiate smaller payments ask for more time to pay off debt. It could also be possible to work out a way to temporarily suspend payments.
Each of these solutions can help you get back on track with your payments and make it easier to get out of debt without having to go through the bankruptcy process.
Unfortunately, too many people dismiss these options or go into a negotiation without being prepared which can make it all but impossible to secure the desired outcome. In order to avoid this, you can consult an attorney who has experience working with creditors and understands what is at stake for you in this difficult situation.