American Financial Law Group

Bankruptcy Alternatives

Bankruptcy Alternatives

Before considering bankruptcy, you should be familiar with the alternatives. For consumers struggling with debt, bankruptcy is one of four options available. Below is a list of options:

Do Nothing - You can ignore your debt but this won't make it disappear. Along with your creditors pursuing collection efforts, your ability to rebuild credit in the future will be severely hampered.

Debt Arbitration - Attorney based debt arbitration is based on accumulating funds for the purpose of settling your debt. Plans range anywhere from 2 to 4 years and require a disciplined approach to setting aside funds monthly. Among some negative factors, the ability of your current creditors to sue and assess wage garnishments and bank levees are the most extreme.
Credit Counseling / Debt management Plan - Generally administered by non-profits, debt management plans offer consumers the chance to re-pay their debt at a drastically reduced interest rate in exchange for closing all their credit accounts. These plans are reported to credit bureaus effectively eliminating any chance of new credit being extended to you. Due to the fact that lenders work with credit counseling agencies, one of the benefits of the plan is a guaranteed settlement of your debt over its life. One of the main negatives is there is rarely any forgiveness of principal balance making the monthly payments high and un-affordable for most consumers.

Bankruptcy - With the changes to the bankruptcy code in 2005, filing a bankruptcy to simply walk away from your debt is more difficult. Although bankruptcy activity is at record levels, if you have a steady source of income, your access to use bankruptcy to simply walk away from your debts may be limited. For more information, read our FAQs section on bankruptcies or simply complete the form below or call us and we will be happy to discuss your situation in an informal conference, free of charge.