Options for Avoiding Bankruptcy

 Posted on January 27, 2025 in Bankruptcy Options

Filing for bankruptcy is a fairly drastic step. While it can offer you a fresh start without the burden of debt, it can also have a lasting impact on your credit score and may make achieving goals like homeownership more challenging. There are several alternatives to bankruptcy available for some debtors, especially those who only have one major creditor. You should explore these alternatives with an experienced New Braunfels, TX bankruptcy attorney before making the decision to file. Bankruptcy can be wonderful for those who truly need it, but it should not be your first resort if there is an alternative path to debt relief.

Negotiating With a Single Creditor 

Most people who are struggling with debt owe numerous different debts to a series of creditors. For example, a person might have several credit cards that are all maxed out in addition to some medical debt and a mortgage in arrears. If you only have one major source of debt, you might be able to negotiate with that creditor to lower your monthly payments, waive late fees to help you catch up on payments, or reduce your interest rate so you can start paying down the principal.

For example, say your main problem is medical debt. Your other debts, if you have any, are small and manageable. However, you cannot keep up with your medical bills. In this case, it would make sense to have an attorney negotiate with the hospital on your behalf to see if it will agree to a solution that would make repayment manageable for you. If your medical debt is brought under control, you will likely be able to keep up with your other debts and recover your financial health without bankruptcy.

Budgeting for Short-Term Repayment 

If your debts are fairly small relative to your income, and the main issue is that you have fallen behind on payments and cannot catch up, you may be able to recover the situation through careful budgeting over the course of a few months. Examine your personal finances and see if there is an area where you can cut back on spending in the short term so that you can put more money towards debt repayment until you are current on payments again. While this solution may be unpleasant for a while, it can spare you an unnecessary bankruptcy. For comparison, Chapter 13 bankruptcy repayment plans usually last three to five years.

Contact a Bexar County, TX Bankruptcy Alternatives Attorney

Law Offices of Chance M. McGhee will discuss all of your options for debt relief with you. Experienced New Braunfels, TX debt relief attorney will work with you to identify the best solution to your debt. Contact us at 210-342-3400 for a complimentary consultation.