Finding Bankruptcy Alternatives in San Fernando Valley
Alternatives to Bankruptcy
Sometimes what seems like a bankruptcy alternative only delays the inevitable and ends up causing additional stress, suffering, and harm. Some of these options may 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 aware of all the fees the credit counseling services charge. Be cautious of unscrupulous credit counseling services.
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 you may eventually end up filing for bankruptcy, be sure to discuss this with one of our San Fernando Valley bankruptcy lawyers.
Debt Negotiation and Settlement in San Fernando Valley
Debt settlement and negotiation involves making an offer to immediately pay off a debt with a reduced lump sum (for example, 50% of the total amount owed). 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 the cost for the service may be excessive.
Contact our San Fernando Valley bankruptcy attorneys today to determine what alternatives may be most helpful for you.