While bankruptcy is often advertised as the correct path to take for everyone, it would be false to claim that all debtors' situations are identical and that bankruptcy is the right solution for everyone. While bankruptcy is the right solution for many debtors and corporations throughout the nation, it is not always be best possible fix for certain cases. Sometimes, an alternative to bankruptcy will be better suited for a debtor's unique financial situation. Fear not, though; your local bankruptcy attorney will most likely be able to effectively handle this type of case as well, as they are intimately familiar with all of the bankruptcy procedures and alternatives.
Some of the most common alternatives to bankruptcy that are used by debtors and attorneys nationwide include the following:
Debt Settlement
This alternative route allows a debtor who is unable or unwilling to proceed with bankruptcy to make affordable monthly payments to eventually repay their debts. Similar to Chapter 13, the debtor will reconstruct the debt into payments over a given time period, and will most likely have the amount of money owed reduced drastically.
Debt Negotiation
By using the assistance of an attorney, you may be able to negotiate with your creditors and lenders to reduce the amount of money you owe. Similar to debt settlement, you may be able to reconstruct your debts into affordable monthly payments once the total has been reduced.
Loan Modification
A loan modification is a type of bankruptcy and foreclosure alternative that often utilizes the skills of a lawyer to modify an existing home loan, or mortgage. This process can be extremely difficult and will require legal help, as some loan modifications may cause more harm than good. Only your attorney will be able to ensure that your rights are protected during this entire process.
Auto Loan Modification
In addition to modifying a home loan, you may also try to modify your auto loan if the monthly payments have become unaffordable due to increased interest rates, job loss, sudden illness, divorce, or another unavoidable circumstance. An attorney can help you negotiate with the bank or your creditor to ensure that the modification is brought down to a level that you can afford.
Short Sale
As an alternative to both foreclosure and bankruptcy, a short sale is the process of quickly selling your home for less than or equal to the remaining balance that is due, so long as the lender approves the sale. It is very important to have a bankruptcy lawyer for this situation, especially because a lender may file a deficiency judgment against a person who fails to agree upon the correct terms.
Deed in Lieu
What is a deed in lieu of foreclosure? This is often used as a foreclosure alternative or defense mechanism and involves a person handing over the deed of their home to the lender or bank. In exchange, the lender is expected to forgive the loan. While this will force a person to lose ownership of the home, it can help them avoid the serious financial impact of overwhelming debt.
Putting an End to Creditor Harassment
One of the most prominent ways to try to avoid bankruptcy is to get rid of the abusive and annoying creditors that continuously poke into your financial situation. While it is their job to collect the debt that is owed, they must do so within certain boundaries as set by the Fair Debt Collection Practices Act. Under this act, you are protected from creditor harassment. Once you have teamed up with an attorney, you have the right to be left alone! With this space from the creditors, you may be given the opportunity to collect the money owed in the debt.
As one can see, there are many different alternatives to bankruptcy that can be used with the help of your local bankruptcy attorney. While filing for bankruptcy or pursuing an alternative option will never be simple, it can be made a much simpler task by hiring an attorney for your case. Many law firms are extremely well-versed in bankruptcy, bankruptcy alternatives, and all laws that surround these types of cases, and choosing the right one for you can make all the difference. When choosing your attorney, be sure to look for a firm that can offer these bankruptcy alternatives and assist you through the entire process. If you are struggling with an overwhelming amount of debt, you need an attorney by your side today! Contact your local bankruptcy lawyer for more information.