Know Your Options: An Overview of Bankruptcy Alternatives
Even if you think bankruptcy is your only option, you may have alternatives that you have not considered to avoid bankruptcy. While bankruptcy is an extremely helpful option for millions of debtors every year, you may want to take some other steps before you make that kind of commitment.
Bankruptcy isn’t for everyone. Depending on the type of debts you have, it may make more sense for you to do something else other than bankruptcy. Below are few common bankruptcy alternatives that you may want to consider.
Negotiate with Individual Creditors
If you have just one or two debts that you are really struggling to address, it may make more sense for your situation just to try to work with those creditors. Some creditors are willing to write off a portion of your debt if you explain that you cannot repay your obligation at the current rates. You might also be able to negotiate a lower interest rate, lower monthly payments, or a short forbearance on collection. Sometimes that little extra breathing room can go a long way to prevent actually having to file bankruptcy.
Stop Harassing Creditors by Using State and Federal Debt Collection Laws
One of the many benefits of bankruptcy is that it comes with an automatic stay that forces creditors to stop collection efforts. However, if a creditor is harassing you, they could be violating federal and Michigan laws regarding debt collection. Instead of filing bankruptcy, you may be able to threaten (or actually carry out) litigation that forces the creditor to operate within the bounds of state and federal laws.
Debt or Credit Counseling Services or Plans
You may be able to take advantage of state laws that help you create a payment plan that is more manageable for you. Sometimes you can do this on your own (sometimes with the help of a lawyer), or you may be able to work with a debt counseling service that consolidates your debt so you can make more manageable payments over time.
You should be wary of credit services that offer to decrease your debt or consolidate it for a very high-interest rate. Sometimes these plans can make matters worse and push you into bankruptcy regardless.
Learn More About Your Bankruptcy Alternatives
Maxwell Dunn can help you determine what the best options are for your situation. Bankruptcy isn’t right for everyone, or it could be just the relief you need for your circumstances. Set up an appointment with a member of our team to learn more.See all videos