Oct 5, 2022 • Steve C. Taylor, Esq.
What are the Alternatives to Bankruptcy in Virginia Beach and the Surrounding Hampton Roads Area?
People are often hesitant to file bankruptcy as they believe the negatives will outweigh any positives. This is often not true. In most cases, the filing of a bankruptcy can help an individual obtain a financial relief that exceeds any negative consequences.
There are many options available to you if you are looking for an alternative solution, but you must also be aware, they are usually not as efficient or as comprehensive as filing for bankruptcy.
What are the Available Bankruptcy Alternatives?
You must always be cautious of scams, which are unfortunately common in our area, when looking for an alternative solution to your debts. While there are several legitimate options to bankruptcy, these options are usually short-term solutions and in general will not completely and/or permanently eliminate your debt.
For a better understanding, we have summarized several of the currently available options:
On its face, Debt Consolidation appears to be beneficial because you can combine all your debts into one loan with a lower interest than what you currently have. In reality, the monthly payment will be higher because you have rolled all your loans into a single loan. If your financial struggles continue and you are not able to make these payments, you will continue to rack up late payment fees and will see your loan balance increase as these fees and additional interest are charged. The vicious cycle has started again.
Debt settlement is another bankruptcy alternative option. It can sound reasonable since there are many services that will negotiate with your creditors to reduce your debt. These companies often make promises that sound too good to be true.
The settlement company will recommend that you pay them each month instead of paying down or off your credit card debt. The Red Flag? The settlement agreement has not been guaranteed at this point.
If the settlement company is not able to reach an agreement with your credit card providers, you will have paid them to accomplish nothing on your behalf. In addition, by not making regular credit card payments, you will have accrued additional interest and will have most likely been charged late payment fees. Ultimately, this leaves you in a worse position than when you started the process.
Debt Negotiation and Restructuring
Under some circumstances, you can talk to your creditors to negotiate a modification to your loan terms to make it more affordable. If your creditors believe that this is the only way to meet your financial obligations, they might be open to negotiations.
This alternative is rarely feasible, as banks are not likely to agree to restructure their loans. Even if they do agree to restructure loans, it is not common for them to offer sufficient relief to resolve significant financial problems.
Asset liquidation is another alternative to reducing or paying off debts. You can sell assets and pay your creditors with the proceeds, sometimes as part a credit counseling program. However, this is not likely to solve your financial problems unless you have significant assets.
If you file for Chapter 7, your non-exempt assets will be sold but, you can keep a substantial portion of your property. The proceeds from the sale will go to your creditors and any debts not covered by your liquidated assets will be discharged.
If Chapter 7 is not the best option for you, you can instead file Chapter 13. This alternative does not require you to sell any of your belongings. Instead, a payment plan is set up that will make your debt more affordable. After the repayment plan is completed, all remaining eligible debts are discharged and you can start your journey to financial freedom.
Do Nothing/No Action
Some individuals find too many options confusing and paralyzing. It is important to remember that no matter how overwhelmed you find yourself, doing nothing is not the solution.
You will continue to make late or missed payments and will continue to see your interest balances rise. This guaranteed cycle will keep you stuck and make it seem impossible to break. Talking to an Alliance Legal Group, PLLC attorney about your situation can help you choose the best option for your future and make it easier to plan.
Why Explore Bankruptcy Alternatives?
Bankruptcy can have a significant impact on your life. In the short term it can affect your credit score and make it difficult to get financing. People often search for bankruptcy alternatives out of fear. However, their fears are often misplaced.
Although it can have serious consequences, bankruptcy is often the best way to get your financial life in order. An Alliance Legal Group, PLLC lawyer can help you decide which option is best.
Go Through Bankruptcy with an Experienced Attorney
Filing for bankruptcy can be overwhelming and stressful and is not something you should do on your own. An experienced Alliance Legal Group, PLLC lawyer can help you ensure that your bankruptcy case is handled efficiently and quickly. Call us today for a free initial consultation and get professional assistance choosing the best alternative for you.
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