You may know someone who has successfully discharged their debts, or have seen some compelling reasons to think about filing for bankruptcy. It might therefore seem strange for us to suggest alternatives to Chapter 7 Bankruptcy.
If you’re suffering with financial worries, and are struggling to pay for your groceries as well as your bills, then perhaps you’ve already thought about talking to a Bankruptcy Attorney.
We know that people like you are often reluctant to file for Chapter 7 Bankruptcy due to concerns about their credit rating, or because they want to keep their home or their car.
However, having the facts and knowing the best option for you will give you the peace of mind you need.
There are several alternatives to Chapter 7 bankruptcy, and one of these might be right for you.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is for businesses that want to stay in business. You won’t avoid bankruptcy, but will be able to adjust your debts.
You will also be able to reduce your debt, or increase the timescale to pay it back, which will help you to continue trading. This will give you more of a chance to pay your debts back.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is known as the repayment or reorganization bankruptcy, and enables you to pay your debts back over time.
This might be right for you if your salary is over a certain amount, or you want to keep your home. An experienced bankruptcy attorney will be able to advise you whether Chapter 7 or Chapter 13 bankruptcy is right for you.
Chapter 13 Bankruptcy is often the right choice for those with mainly consumer debts, such as those caused by deliberate overspending.
However, in our experience, the reasons why people file for bankruptcy are to do with job loss, injury or illness, or divorce, rather than maxxing out credit cards on designer clothes and other luxury items.
If you want to avoid foreclosure or stop your car from being repossessed, Chapter 13 Bankruptcy could be the solution. This option enables you to catch up with missed mortgage and car payments over time, so you can keep your home and car.
Talking to creditors
Simply talking to your creditors can help.
Rather than burying your head in the sand by ignoring letters and phone calls, your creditors will often try and help you. But they can’t help you if you don’t speak to them.
Your creditors know that they will often get less than you owe them if you file for bankruptcy, and so this can be a powerful bargaining tool for you. Threatening to file for bankruptcy can get the amount you owe reduced or the terms of repayment improved. Your creditors would prefer you to pay back some money rather than no money.
Debt counselling services
Debt counselling services can help you to talk to your creditors, and manage your money better.
This may help you to understand more about your income and outgoings, so that you are more able to pay back your debts. Again, you need to tell someone that you’re struggling, so that you can get the help you need.
Debt management companies
Debt management companies try to negotiate you a lower figure with you creditors, and then charge you a monthly payment, and pay your creditors on your behalf.
However, there are potentially several issues with this.
Your creditors don’t have to agree to a lower figure, and can sue you to collect the full amount you owe.
Also, in our experience debt management companies can take a significant cut of your monthly payment, so it takes you longer to pay your debts off. We have even heard of unscrupulous debt management companies taking money and not paying back creditors.
Although we are biased, here’s why we think hiring a bankruptcy attorney is better than hiring a debt consolidator.
We know that each option has its pros and cons, and that one of the alternatives to Chapter 7 bankruptcy might be right for you.
If you don’t think your debts merit filing for bankruptcy, or you’re worried about speaking to your creditors or trusting a debt management company, then we recommend you speak to an experienced Minnesota Bankruptcy Attorney first to learn more about your options.
Based on our experienced of helping over 40,000 people in Minnesota become debt free, we think we’re qualified to know which option will be right for you.
Speak to an experienced Minnesota bankruptcy attorney today.