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Filing for bankruptcy is a big life decision. As such, you shouldn’t rush into it. Since filing for bankruptcy is not always the best option, it is important to take the following alternatives into consideration before deciding to file for bankruptcy.

  1. Negotiation

Believe it or not, creditors are often willing to negotiate with you to settle your debts. Creditors sometimes can agree to settle your debts for less than you owe. Many creditors also can offer you various types of payment plans that may seem attractive to you. Remember, though: even though a settlement or payment plan may initially seem manageable for you, it might not be. Do not just rush into a settlement or a payment plan because you want to keep your creditors happy or avoid filing bankruptcy.

Only agree to a settlement or payment plan if it is manageable for you. For example, if you are currently unemployed and/or have very little assets, you might not be able to settle your debts with the creditor – even if it is for less than you owe – or keep up with a payment plan. On the other hand, if you have steady income and/or assets that you are willing to sell, a settlement or payment plan may be the best option for you.

Bottom line: Make sure you fully understand your financial situation – present and future – before negotiating and entering into settlements or payment plans with your creditor. If you can manage it, take it. Don’t rush into filing for bankruptcy without first exploring this option.

  1. Stop Creditor Harassment

If you are considering filing for bankruptcy, you should ask yourself why. What do you hope to achieve by filing?

Often times, people consider filing for bankruptcy because they want to put an end to creditor harassment. They feel cornered and threatened and think that the only solution is to file. This is not necessarily the case. There are both federal and state debt collection laws that protect you from abusive debt collection practices. For example, under the Fair Debt Collection Practices Act (FDCPA), debt collectors are prohibited from collection conduct that is abusive.

Bottom line: if your main concern is stopping creditors from harassing you, there are ways to do that without having to file for bankruptcy. Talk to an attorney to learn more about your rights.

  1. Do Nothing

Surprisingly, sometimes the best option is to do nothing at all. This may be an alternative to filing for bankruptcy if you are what is call or texted “judgment proof.”

You are considered judgment proof if you have little income or property. In other words, you have nothing that a creditor, who tries to sue you or get a court judgment against you, can collect from you.

Bottom line: if you are currently judgment proof and do not foresee your financial situation improving in the future, filing bankruptcy may not be for you.

Make sure you explore other options before filing bankruptcy. To determine whether any of these alternatives are right for you, contact us today.