Understanding the Alternatives to Bankruptcy

If debt has taken control of your life and lives rent-free in your mind, you’ve likely considered bankruptcy more than once. However, if you’re worried about the effects on your credit, you might be interested in checking out other options first.

While you try out other ways to manage your debt, you may find it helpful to look into how bankruptcy could help you. Call Padgett & Robertson at 251-336-3695 to set up a consultation now.

Get Debt Collection Calls Under Control

Maybe your debt is manageable, but you are overwhelmed with collector calls. That’s understandable—debt collectors can be aggressive and persistent, even when you truly cannot pay them. You don’t have to declare bankruptcy to get the calls to stop.

Familiarize yourself with the Fair Debt Collection Practices Act and know your rights. If you wish to communicate with collectors via mail instead of a phone call, you can ask them to do so. This may free up enough mental space for you to address your debt head-on.

Negotiate Payment Plans

Remember, your collectors want your debt paid off—they don’t want to force you into bankruptcy, because then they get little to nothing. If you can come up with a payment plan that takes care of your debt, even if it’s not quite on their preferred timeline, they may agree to it.

Before you consider this, look into the number of accounts you have, what your monthly budget is, and what you are supposed to be paying monthly. If you have ten outstanding accounts, getting just one on a payment plan won’t do much to help you—you want to get as many collectors on board as possible for any real relief.

Refinance Qualifying Debts

A proper refinance may also be a viable option for you. This is a particularly useful idea for those with credit card debt and high-interest rates. A low-interest personal loan or balance transfer could significantly lower monthly payments without putting you through the stress of bankruptcy.

Note, though, that you should have your own spending habits and approach to money under control before you do this. Otherwise, you risk refinancing your credit card debt, running your credit cards back up, and ending up in an even worse position. Be honest with yourself about what you are capable of sticking to before you refinance.

Look Into Credit Counseling Agencies

Before you jump to hiring a credit counseling agency, slow way down and consider your options slowly and carefully. There are tons of shady and unreliable credit counseling agencies out there.

Some take your monthly payments, tell creditors to stop calling you, and simply stop paying on your debt—their goal is to run out the statute of limitations. While this does stop collection calls, it puts you at great risk of being sued and completely tanks your credit.

Even worse, since the creditors can’t call you, you may not find out until you get a court summons. If you go this route, you must do your due diligence to ensure you choose a reliable and trustworthy credit counseling agency.

Consider Debt Settlement

Debt settlement is similar to credit counseling, payment plans, and refinancing in some ways, but different than others. It does often involve an alternate payment schedule, but it usually means paying a smaller amount than what you owe. Note that this will have a detrimental effect on your credit, but likely not as bad as bankruptcy would.

You should also know that creditors aren’t in a rush to accept settlement offers, especially if you’re up to date on payments. If you’re current on payments, they’d rather keep collecting that interest every month for as long as possible. This option generally works best if you are already behind on payments and the creditor can see that you are on track for bankruptcy.

If Bankruptcy Is on the Table, Contact Padgett & Robertson Now

If none of these options stand out to you or you think they will only buy you a few months of peace, it could be time to think seriously about bankruptcy. The team at Padgett & Robertson is here to support you as you navigate this process and plan for a fresh start. Set up a consultation now by calling us at 251-336-3695 or sending us an online message.