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Alternatives to Bankruptcy

You may not need to file bankruptcy. If you are behind in your credit card payments, or other debts, you may be able to negotiate a payment plan with your creditors. Before filing for bankruptcy protection, you must show the bankruptcy court that you have taken an approved personal finance course. This course will help you determine whether you really need to file for bankruptcy, or whether a repayment plan alone could help get you back on your feet financially.

Creditors do have some incentive for accepting a repayment settlement. In a bankruptcy action, a creditor can be required to accept a 20% discount on the amount owed to them if the debtor can show by clear and convincing evidence that the creditor was offered a deal that repaid at least 60% of the debt at least 60 days before the bankruptcy petition was filed. Although this is not a strong disincentive for creditors to settle, some creditors might be willing to accept a settlement, rather than having to deal with a debtor in the bankruptcy court.

Beware of Scams!

Many so-called credit consumer counseling agencies are really just scam operations in disguise. Many such agencies are actually working for credit card companies and are designed to keep you in debt indefinitely. You should not pay large upfront fees to anyone who promises to lower your debt.

As part of our free consultation, we will help you contact an ethical, approved credit counseling agency that will assist you in making this evaluation. Or, you can find a list of agencies that have been approved by the Office of the U.S. Trustee at www.usdoj.gov/ust (click “Credit Counseling & Debtor Education.”) You may find after taking this two hour course that you can prepare a plan for a better financial future without having to file bankruptcy. If however, you find that a repayment plan will not get you the relief you need from harassing and unreasonable creditors, you will have already satisfied one of the requirements for obtaining a discharge from your debt.

For more information regarding financial counseling and bankruptcy protection, visit this link:

http://www.justice.gov/ust/eo/bapcpa/ccde/docs/FTC_Consumer_AlertCC.pdf

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