Bankruptcy Alternative - You Do Have Options

    Before beginning a Chapter 7 bankruptcy or Chapter 13 bankruptcy filing, the debtor should look for a  bankruptcy alternative.  There are options for debtors that should be explored before jumping into the stressful experience of a bankruptcy proceeding.  Even the three to four months experience of Chapter 7 bankruptcy liquidation is stressful and takes its psychological toll on the filer. The three to five years of a Chapter 13 bankruptcy supervision results in a longer period of stress.  Bankruptcy filings are reported on the filers credit reports  for a period of seven years for Chapter 7 bankruptcy and ten years if it is a Chapter 13 bankruptcy.  This may make it a little more difficult for the filer to obtain credit.  Because the effect of filing doesn't go away immediately, it is best to look at a bankruptcy alternative before diving in to a bankruptcy proceeding. Prior to making a decision you should seek the help of a bankruptcy attorney.

What is Bankruptcy Alternative

     What are some of the  bankruptcy alternatives?  The one thing the debtor can do is to contact his creditors.  Inform the creditors of your financial situation and that you are willing to work with them in trying to avoid a bankruptcy filing.  This lets them know that you are responsible and trying to work out your financial difficulties.  Most creditors will try to work with you in rescheduling payments, possibly renegotiating the debt or the interest rate or the terms, whatever.  It is in their best interest to work with you rather than see the debt discharged in a Chapter 7 bankruptcy filing.

     Debt consolidation is another possible bankruptcy alternative. This is the process of consolidating your bills by taking out a loan that pays off all or part of the bills. Then the new borrowed loan results in one monthly payment, perhaps with a lower interest rate.  There are debt consolidation agencies that perform these services. They have counselors that will evaluate the debtors situation and advise him/her as to the best approach. Their counselors can handle contact with creditors, reschedule payments, etc.  This allows the debtor to obtain a form of debt relief, a prefered bankruptcy alternative.  It relieves some of the stress of the situation and doesn't leave a mark on your credit record, and there will be no bankruptcy record.  He has one payment per month and calls from creditors are handled by his debt counselor.

The Ultimate Bankruptcy Alternative

     Sometimes the best bankruptcy alternative is to do nothing.  If the debtor is living at the subsistence level, has little or no property, with no apparent hope of change coming, there is nothing to be gained by creditors suing them.  They have no property that can be attached.  Eventually, creditors will write off the debt. This will go on the debtor's credit record and will disappear after seven years.  In this situation it doesn't make sense for either the debtor or creditor to file.  There is no property to liquidate or attach.

     A debtor should only file for personal bankruptcy after checking out other bankruptcy alternatives.  There may be options that the debtor doesn't know about that will work out better for him, make sure you have a professional bankruptcy attorney check for a bankruptcy alternative.