Financial problems may drive you to consider filing for bankruptcy, but it’s prudent to find out what your other options are for getting rid of your debts. It’s true that bankruptcies have been the fitting solution for many bankrupt debtors, but filing bankruptcy is usually the last resort for somebody who is financially struggling.
What Are Your Bankruptcy Alternatives?
Here are some other measures you can look into if you don’t want to file for bankruptcy.
Exploring your legal rights under anti-harassment laws
Filing a bankruptcy petition provides you with bankruptcy protection. This comes in the form of an automatic stay that halts debt collection efforts from your creditors and other collection agencies. However, if you just want to stop harassing behavior from debt collectors, look into the provisions of pertinent laws such as the Fair Debt Collection Practices Act or similar state laws.
Arranging debt reorganization outside the bankruptcy process
If you’re the kind of debtor who has sufficient income and actual assets, you can arrange to make your debt payments without going through all the rigors of repayment with the sanction of a bankruptcy court. You can arrange monthly installments from your disposable income or liquidate your assets to pay off debts. You can even negotiate to make your debt amount more manageable. A creditor might be willing to do this if it increases the odds of being able to collect on a debt. This repayment plan may be seen as a better arrangement than if you were to file bankruptcy under Chapter 7. In a liquidation type of bankruptcy, some creditors might not be able to collect since many, if not all, of your assets, are bound to be exempt.
Hiring the services of a credit counselor
Getting help from a credit or debt counseling agency may allow you to mend your finances without having to face your debt collectors and going through bankruptcy proceedings. A credit counselor can come up with a debt management plan for you, something that’s similar to the reorganization plan required in a Chapter 13 bankruptcy case.
The difference in taking this route is that your credit report won’t end up reflecting a personal bankruptcy, which would cause your credit score to take a dive. This is just one of the consequences that people who filed for bankruptcy experience. There is always the stigma, besides that.
Take note, however, that this option doesn’t provide the protection that normally comes with a bankruptcy filing. You probably won’t get to pare down what you owe. Besides having to pay back the entire amount, you won’t be allowed the flexibility accorded to Chapter 13 filers who miss a payment.
At any rate, you will be needing the services of credit counselors even if you do end up declaring bankruptcy. Part of the requirements before filing is completing a credit counseling course. Either way, make sure you approach a legitimate credit counseling agency by choosing from Arizona’s list of services approved by the US Trustee.
What if You Were Judgment Proof?
If you’re in severe financial hardship that you simply have nothing with which to pay your debts, creditors cannot collect from you even if they were able to obtain a judgment against you. You are allowed to keep enough to sustain life. Debt collectors cannot take that little away from you. Unless yours is a special case involving unpaid child support or taxes, it’s probably not going to earn you any jail time. Keep in mind, however, that as soon as you have the means to make payments, the judgment against you will come into effect and force you to pay.
Want to Know the Right Debt Solution for You? Contact an Arizona Bankruptcy Attorney Today!
If you’re considering bankruptcy to deal with owed debts, you best discuss your situation with a bankruptcy lawyer. You don’t always have to declare bankruptcy to get out of debt. Bankruptcy lawyers can advise you on your options and assist you in carrying out the debt settlement solution you decide on. A bankruptcy discharge is great for debt relief, but bankruptcy filings do involve time, effort, fees, stigma, etcetera.
Find out what your choices truly are. Call us at Phoenix Fresh Start to speak with one of our experienced Arizona bankruptcy attorneys.