Bankruptcy Alternatives
These days more people than ever before are considering filing for bankruptcy, but of course consumer bankruptcy is not a one-size-fits-all solution. Many individuals may not be able to do a personal bankruptcy filing because of a high level of income relative to their household size, nonexempt assets or their legal immigration status or future financial considerations. Since credit counseling offered by authorized agencies is currently required for all bankruptcy filers, taking this course even without later doing bankruptcy might be a good option for those wanting more information about alternatives to bankruptcy. Many of the same agencies offering the course provide credit consolidation services. However, be aware that private credit consolidation companies are in the business of making money by arranging repayment of debts.
Often, clients come to me after having unsuccessfully tried credit consolidation and having automatic deductions of monthly payment amounts withdrawn from their bank accounts. In addition, Chapter 13 bankruptcies offer the advantages of private credit consolidation with the legal protections of bankruptcy by arranging for repayment on the debtor’s terms. I usually recommend people considering bankruptcy to start trying to negotiate total balances owed and payment plans directly with the creditors, most of whom are happy to get some portion of what is owed. Be sure to check first whether you qualify for bankruptcy in your jurisdiction, as the median household income amounts and exemptions allowed for property would vary from state to state.
