A critical decision for any individual facing debt problems is what route to take to a solution. There are Bankruptcy solutions (such as Chapter 7 and Chapter 13) and Non-bankruptcy solutions. Which one is best for you is a question best answered after a thorough consultation with your attorney.
Learn more about Individual Debt Relief
Non Bankruptcy Alternatives In a Nutshell:
There
are many non-bankruptcy alternatives for individuals. The
short list of popular choices includes, out of court workouts with
creditors and asset or business sales.
A workout with creditors
is simply a negotiation with your creditors for favorable terms of
repayment of debt or outright forgiveness of debt. One problem with an
out of court workout is that it requires you to be committed to a continuing payment plan; regardless of your future cash flow. Another problem is that creditors have to agree to voluntarily compromise the debt owed to them. This is often the major roadblock to a workout.
Also, in a workout the lender may require either a large down payment or additional collateral for the loan. For instance, a bank may require that you pledge bank accounts, stocks or other assets to secure a workout loan. Doing so gives them a better position if you cannot pay the workout loan amount.
Some people use their hard earned retirement funds to pay creditors. This option can be tricky and should always be discussed with an attorney before you commit to do it. The risk is that you will exhaust your retirement funds and still need to file bankruptcy. In bankruptcy, most retirement funds are exempt from creditors and you can keep them.
Asset sales
are another non-bankruptcy option. Perhaps you have equity in your home or in some other real estate that you can sell. Those funds can be applied to your creditors and you may be able to avoid a bankruptcy case.
However, when a home mortgage is "upside down" and has no equity, a sale becomes more difficult due to the concerns of competing
creditors. Sometimes a short sale can be negotiated with the mortgage lenders. In other cases, a Deed in Lieu of Foreclosure can be used to avoid foreclosure.
Bankruptcy Alternatives for Individuals:
The
Bankruptcy Code provides for several possible solutions for individuals. Covered in other pages on this website are Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. They are very different and achieve different goals. However, they are effective tools for obtaining debt relief.
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our office in Glen Ellyn, Illinois, we proudly serve DuPage, Kane, Will
and Cook Counties, including: Naperville, Wheaton, Lombard, Downers
Grove, Hinsdale, Lisle, Carol Stream, Downers Grove, Westmont,
Elmhurst, Addison, Darien, and many others. We are your local source
for bankruptcy law.
Disclaimer: The information on this website is provided as
general information only. It is not a substitute for legal advice from
a licensed lawyer. You should consult with an attorney if you are
considering bankruptcy. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.