Sometimes there are good options to help you avoid bankruptcy.

Which bankruptcy alternative is best depends greatly on your specific situation. Sometimes what seems like a good bankruptcy alternative only delays the inevitable, causing additional stress and suffering you could have avoided altogether.

That’s why we offer a free consultation, to help you understand all of your options, including bankruptcy alternatives that may work well for you. Some of the options we may discuss include:

Credit Counseling Services

When high interest rates and penalties are making it difficult for you to pay off your debts, a consumer credit counseling service may be helpful. In addition to helping you develop and stick to a realistic budget, they can often negotiate with your creditors for more favorable terms (interest rates and waved penalties).

Sometimes credit card companies are more likely to respond to such requests when made by a consumer credit organization – it tells them you are serious, are seeking help, and are getting advice on how to meet your obligations. However, there is no guarantee a credit card company will agree to this, and they are not obligated to do so.

Be cautious and learn what fees the credit counseling services charges, and also who is responsible if you make payments to them but they do not remit your payments on time or they underpay a creditor, resulting in fees or penalties that you will owe.

Debt Consolidation

Debt consolidation may help if you can obtain a lower interest loan to pay off all of your higher interest debt. However if you already have a lot of debt, this usually requires borrowing against an asset (such as a home or land) that you pledge as collateral.

You are essentially converting your unsecured debts (credit cards for example) to secured debt (perhaps a second mortgage). While the interest may be lower, the risk of losing your property increases should you be unable to make timely payments. If there’s any chance that you may eventually end up filing for bankruptcy, be sure to discuss this with a good Los Angeles Bankruptcy Attorney before proceeding.

Debt Negotiation and Settlement

Debt negotiation involves making an offer to immediately pay off a debt with a reduced lump sum (for example, 50% of the total amount owed) rather than making continued payments over time. This can work if you have money available to pay the lump sum, especially if the creditor understands that your only other alternative is to file for bankruptcy, in which case they may receive far less.

This works best when you are dealing with only a few larger debts rather than multiple creditors, especially if the debts are old and being paid off slowly. However, using a “debt negotiator” can limit the benefit of this approach, since they often expect a hefty fee in return for negotiating such a settlement.

Discover if there are bankruptcy alternatives that best fit your situation. Contact our bankruptcy attorney today for a no-obligation consultation.