U.S. Lawyers for Alternatives to Bankruptcy

Legal Help With Creditor Negotiation and Loan Modifications From Bankruptcy Attorneys Throughout the United States

Dealing with overwhelming debt can be incredibly stressful. Those who are struggling to make payments on credit cards, mortgages, and other loans while also covering their daily necessities can sometimes feel like there is no way out of their situation. While bankruptcy can be a solution to these problems, it comes with its own consequences, including a reduced credit score and a record that may make it difficult to obtain loans, housing, or employment. For those who are looking to make their debts more manageable without pursuing the legal process of bankruptcy, there are a variety of alternatives that may be available.

Ways to Address Debt Without Filing for Bankruptcy

If bankruptcy is not the preferred option, it is usually best for debtors to work with their creditors to find a way to repay some or all of their debts. Ignoring debts and failing to make payments could lead creditors to take legal action, such as credit card lawsuits, which could result in a debtor's wages being garnished or liens being placed on their property. Failure to pay secured debts, such as a mortgage or auto loan, could result in home foreclosure or the repossession of property. To avoid these consequences, debtors may have a variety of options, including:

• Debt settlement - When a debtor files for bankruptcy, creditors usually will not be able to recover the money owed to them, even if some of the debtor's assets are liquidated through Chapter 7 bankruptcy. Because of this, it is often more financially beneficial for creditors to work with debtors to help them avoid bankruptcy. A debtor may be able to negotiate a settlement that will allow them to only pay back a portion of the full amount owed, and by clearing this debt, they can free up financial resources to cover other debt payments and ongoing expenses.
• Loan modifications - Creditors will often prefer to avoid foreclosing on a home, since the process of doing so can be very costly, and they may be unable to resell the home in a timely fashion. In many cases, creditors are willing to work with homeowners to modify the terms of a mortgage and ensure that they can afford ongoing payments. These modifications may include the temporary deferral of mortgage payments, adjustments to a loan's interest rate, lowering payments by extending the term of the loan, or adding past-due payments to the principal of the loan.
• Debt consolidation - In many cases, debtors will struggle to make payments on multiple credit cards or other types of loans, but they may be able to make these payments more manageable by consolidating them into one loan. This may be done by transferring credit card balances to a single account, although in these cases, debtors should be aware of any fees or penalties that may apply to these transfers. A debtor may also be able to receive a personal loan or a home equity line of credit that has a lower interest rate than credit cards. While this can reduce the total amount that a debtor will repay and provide more time to complete repayment, it will also require a debtor to use their home or other assets as collateral, and this property could be lost if the debtor becomes unable to make payments in the future.
• Making financial changes - Debtors may be able to make adjustments to their lifestyle that will allow them to repay their debts. This may include cutting back on expenses, finding additional sources of income, selling valuable assets, or borrowing money from family members or friends. In many cases, these changes will be temporary, allowing a person to become current on their payments, pay off some debts, and manage their ongoing expenses.

Contact a U.S. Debt Relief Attorney

Those who are struggling with debt will want to understand all of the options available. An experienced bankruptcy lawyer can not only help debtors determine whether filing for bankruptcy is the best path to debt relief, but they can also explain other options, assist with negotiations with creditors, address creditor harassment, and provide guidance on the steps a person can take to achieve financial security going forward.