Bankruptcy Alternatives

Myth: A credit counseling firm will help me avoid bankruptcy by renegotiating my debts.

Fact: There are many different types of credit counseling firms, and some do a better job than others. However, if you have significant debt you may end up having to file bankruptcy anyway.

Debt negotiation as an alternative to bankruptcy

Debt negotiators will often create a debt management or payment plan as an alternative to filing bankruptcy. In this alternative to filing bankruptcy, you will be asked to pay the debt negotiator a certain amount each month and that person will use that money to pay your creditors. The concept behind debt negotiation is that creditors will be accept a reduced amount of what you owe in exchange for you not filing bankruptcy. However, if you are not able to adhere to your debt management plan, you may have to file bankruptcy anyway—, and then you will be out the up-front fees you paid to the negotiator.

Home equity loans as an alternative to bankruptcy

Banks may offer you a home equity loan as a way to pay off your bills. However, your home is your most important asset—and one that is exempt from seizure under bankruptcy laws. Filing bankruptcy will allow you to preserve the equity in your home, along with most other personal assets, while getting rid of your debt.

In many cases, the alternative to filing bankruptcy is worse than filing bankruptcy itself. Before you decide to take any action to resolve your debt problems, consult a Board Certified bankruptcy lawyer.

Contact Me Today

Fred E. Walker is committed to answering your questions about Bankruptcy and Tax Resolution law issues in Austin, TX.

I offer a free debt relief consultation and I'll gladly discuss your case with you at your convenience. Contact me today to schedule an appointment.

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