Most people that ever declared bankruptcy wish they'd taken action sooner. They wish they'd changed jobs, reduced their spending, thrown away their credit cards. But, more than 91% of bankruptcy filings are due to circumstances beyond the debtor's control - medical bills, divorce, job loss. And while seeking alternatives to bankruptcy can be good, by the time the word bankruptcy enters our vocabulary, we're already in so deep that alternatives are not the answer. But, from another viewpoint, pursuing some of these alternatives before filing for bankruptcy can possibly reduce your debt and make the bankruptcy process easier, for both you and Everett bankruptcy attorneys, if not unavoidable.
Here are some available alternatives and why they may fail to fend off bankruptcy:
Informal arrangements with creditors
Making informal arrangements with mortgage holders or credit card companies may seem like a good idea, but can often carry unforeseen consequences and even deepen your financial problems. Credit card companies often have in the fine print of your contact with them the provision that they can raise your interest rate and lower your credit limit at any time and for any reason. Hence, a well-intentioned phone call to the credit card company to try and delay or reduce the payment due may result in your interest rate being increased or worse, doubled. And, as an added bonus, some credit card companies retain the right to apply this increased interest rate to you existing balance, not future balances, leaving you more indebted than when you started.
Consumer credit counselors
This term covers a wide variety of businesses with a wide variety of intentions and expertise. As debt levels have risen, so have the number of shady businesses advertising themselves as saviors to your credit woes. They claim to be able to repair your credit or negotiate with your creditors - all for an up front fee, usually a hefty one. However, oftentimes, the debtor is left with more arrearages and emptier pockets as the professed credit counselor slips away into the night with the up front money. Everett bankruptcy attorneys maintain a list of legitimate consumer credit counselors.
Another more formal arrangement is the workout. A workout is a mutually negotiated and agreed upon agreement between a debtor and his or her creditors in which terms for repayment are defined. A "composition" workout is a contract between a debtor and his or her creditors in which the creditors agree to accept a reduced amount of money for settlement of the debt in full. In an "extension" workout, the creditors agree to accept less money for a longer period of time until the debt is paid in full. A Chapter 13 bankruptcy does all of the above, except you are negotiating these payment terms while under the protection of the Chapter 13 and its auspices. Everett bankruptcy lawyers can help you decide, under the new bankruptcy reforms, whether a Chapter 13 bankruptcy is for you or if a Chapter 7 bankruptcy would better fit your situation.
The old adage "nature abhors a vacuum" applies to the rising rates of bankruptcy. As more and more people find themselves floundering in debt, unscrupulous characters move in to take advantage of the situation. Credit Repair and credit counseling agencies have appeared like mushrooms after a rain. While there are some legitimate and very well intentional agencies, many others intend only to make a fast buck and then disappear. The fact of life is you are not going to come out of this process completely unscathed, so proceed carefully with your options and minimize the damage. Everett bankruptcy attorneys can provide you with further information.
When faced with overwhelming debt and the possibility of bankruptcy, Everett bankruptcy attorneys can help get your financial situation back under control.