What Are The Alternatives for Filing Bankruptcy?

Those who are overwhelmed by debt need to understand their options. Many continue to drown in debt because they are scared of bankruptcy.

While many people choose bankruptcy as an option for debt relief, it comes with consequences. While bankruptcy is often seen as a fresh start, it can ruin your credit for as long as 10 years, making it impossible to get a loan.

Because of this, many people want to know what other options they have. The good news is that there are several alternatives available to you.

Credit Counseling

A credit counselor can review your income, debts, and other expenses and help you create a budget and a plan for getting back on track. A little advice and coaching from a seasoned counselor may be all you need to take control of your finances. However, if you need a little more help, credit counselors may be able to work out a program with your creditors that lowers your payments.

Debt Consolidation

If you have not missed any payments yet but think you might in the future, you may be able to avoid bankruptcy using debt consolidation. This is a good option if you have decent credit. You can get a personal loan and move the balances of high-interest credit cards to a loan that has a lower interest rate and a fixed monthly payment. This option can consolidate your bills into one monthly payment, making it easier to pay off debts.

Debt Management Plan

A debt management plan is a repayment program created by a certified credit counselor. The counselor will review your finances and work with you to determine how much you can put toward debt repayment each month. The goal is to resolve debts in three to five years.

The credit counseling agency tries to convince your creditors to accept repayment over time through the debt management plan because the alternative is to force you into bankruptcy and risk collecting nothing. However, creditors are under no legal obligation to enter into the plan.

Debt Settlement

Debt settlement companies claim to lower your debt dramatically by negotiating with creditors on your behalf. They tell customers to stop making their monthly payments and instead make regular deposits in a special savings account. Once you accumulate sufficient funds, the money is offered to your creditors as partial repayment.

Debt settlement is risky, though, as there are high fees involved, as well as damage to your credit score. Plus, you may be able to negotiate with creditors on your own.

Contact Our West Palm Beach Bankruptcy Attorney Today

If you are facing money problems, bankruptcy should be a last resort. The options listed above can help you get out of debt.

West Palm Beach bankruptcy attorney Brian K. McMahon, P.A. can help you understand the best option for your financial situation. Fill out the online form or call (561) 658-1789 to schedule a consultation. We serve the West Palm Beach, Boca Raton, Port St. Lucie, and South Florida areas.