Debtor FAQ's
I don’t think bankruptcy is right for me. What are some other
choices?
Bankruptcy can be devastating both economically and emotionally.
Though most bankruptcies are granted, it isn't meant to be an easy
way out of your debt. Extensive damage to your credit and long-term
economic issues from bankruptcy will cause many problems in the
years to come and it is far better to explore any and all other
alternatives before making the decision to file for personal
bankruptcy. Other choices to consider:
- Doing nothing. This may be an appropriate strategy
where the debts are small and / or where the debtor is elderly,
judgment proof and likely to remain so.
- Negotiating. Creditors are sometimes willing to settle
on delinquent debt for a percentage of the balance owed. The
creditor typically requires that the settlement be paid in a lump
sum. There may be tax consequences as the forgiven debt is treated
as income unless the taxpayer is insolvent.
- Credit counseling. Credit counselors are funded by
creditors and will often set up a debt management plan to pay back
unsecured consumer debts. Often times a credit counselor is able
to negotiate reduced interest rates and late fees.
- Offer in compromise. For individuals who have primarily
tax debts, offer in compromise with the federal or state taxing
authorities is a very legitimate alternative.
- Foreclosure assistance services. There is nothing
positive to say about companies that prey upon homeowners whose
homes are in foreclosure.
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