Alternatives to Bankruptcy

While filing for bankruptcy can often help to alleviate financial strain and allow for a fresh start, there are some circumstances where an individual may be able to benefit from alternatives to filing for bankruptcy. Additionally, if there are circumstances that would prevent an individual from taking full advantage of the protections that bankruptcy offers, either due to recently dismissed bankruptcy cases, or the transfer of property and/or assets in the past year, the alternatives may be able to provide a workable solution to the problem until bankruptcy becomes a viable alternative.

Payment Arrangements

If you have been making regular payments to creditors and ad a good payment history before your financial problems arose, you may be able to work out payment arrangements with your creditors. Some creditors, like mortgage lenders, have a special incentive to work with individuals who have fallen behind. Other creditors may prove more difficult to negotiate with, depending upon the circumstances.

If you do manage to negotiate payment arrangements, either on your own behalf or through a lawyer, be certain to get the details of the agreement in writing. You want to be certain there is documentation of your payment arrangements if collection activities continue. In this way, you can avoid the possibility of being subjected to abusive collection practices even after you've come to a payment arrangement agreement.

Credit Counseling/Debt Consolidation

Many credit counseling and debt consolidation programs work much the same way as a Chapter 13 bankruptcy, with the exception being that the creditors are not legally bound to agree with the repayment plan.  If you have some funds with which to pay off your creditors, and do not need immediate help to prevent garnishment, repossession, or other collection actions, this may be an option. However, you should be certain that any organization you choose as your credit counseling and/or debt consolidation service is reputable. Don't pay large upfront fees to companies promising to eliminate your debts - in many cases, these turn out to be a scam and you could find yourself in a worse financial position than you were before.

For some individuals who have no assets whatsoever, and minimal income, no action may be required. Creditors cannot collect from such individuals, as they have no assets to be seized. In some cases, creditors won't bother trying to escalate the collection process, which will only cost them more money with very little chance of a return. However, doing nothing is a risk, as creditors may resume collection activities in earnest if there is an indication that the debtor's financial situation has improved.

If you are considering options to bankruptcy, you must ask yourself if you are only delaying the inevitable. If an alternative arrangement will see you through a temporary financial difficulty, that's great - however, if your income has dwindled, bills are piling high, and you are nearing the end of your financial stability, trying an alternative method will only drag out your troubles needlessly. Don't put yourself through the gauntlet of collection notices for no reason - if you need help, filing for bankruptcy sooner rather than later may be just what you need to get back on the right track, financially.

Our team of dedicated, experienced Orange County Bankruptcy Attorneys will work with you to ensure that you get the financial protection you need, at the time that you need it most. Contact us today and schedule your free initial case evaluation as soon as possible.