April 13, 2024

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The Alternatives to Filing Bankruptcy

People across the nation are facing some unprecedented financial challenges and a severely depressed job market. In the current economy, more and more people are finding themselves burdened with large amounts of debts. These may include credit card debts, the mortgage on your home, or overdue student loans. One way to overcome some of your debts is to file for bankruptcy in your state.

However, there are alternatives to bankruptcy which may help you protect your credit score. For advice on bankruptcy and its alternatives, you can consult an experienced bankruptcy attorney.

Alternatives to Filing for Bankruptcy

Generally, the main alternatives to filing bankruptcy involve negotiations with your creditors. These options may include refinancing your mortgage, or structuring monthly payments through a credit counseling service. Regardless of how you choose to avoid bankruptcy, you should always know your options under your state’s bankruptcy laws, which a bankruptcy attorney will be willing to explain.

Some of the alternatives to filing for bankruptcy include:

  • Deed in Lieu of Foreclosure
  • Re-amortization of overdue mortgage
  • Negotiating one debt
  • Consulting with a reputable non-profit credit counseling agency

Beware of Some Bankruptcy Alternatives

There are some companies that will send mailers to people who have foreclosures pending. Claiming to offer “mortgage assistance”, these companies will promise to stop your foreclosure and help you avoid filing bankruptcy. However, in most cases these companies will require an immediate payment in exchange for their promise to obtain another mortgage to pay off your existing loan.

These companies may also promise to negotiate with your lender, and stop the foreclosure altogether. The initial payment for this service may be as much as two month’s mortgage payments. However, these companies are notorious for falling short of promises and leaving homeowners in worse financial situations than they were prior to the contact.

There are other companies with creative ways to take advantage of your situation. The best thing to do, if you need professional help, is to call a bankruptcy attorney.