I
have divided options from a debtor into both bankruptcy and non-bankruptcy
alternatives. The main advantage of choosing bankruptcy alternatives, as
opposed to the non-bankruptcy alternatives, is that Mr. Hardy can force a
creditor into forgiving a debt or accepting a repayment plan which normally
would be out of the question.
The alternatives of non-bankruptcy are difficult to pin-point because all they
do is give ways of handling your creditors that prove to be beneficial to both
you and the creditors. However, the offer will not be the same as your original
agreement. There is no “Non-Bankruptcy Code” (Laws). Therefore, there are only
as many non-bankruptcy solutions as your creditor will agree to. There are ways
you could propose a solution to your creditor about your credit issues which
the creditor will accept and doesn't have to involve bankruptcy laws, but your
creditor still must agree to it if it is without filing a bankruptcy.
First of all, it's helpful that you generally understand the terms of the
agreements you have signed with the creditors that govern your situation with
your creditors. Obviously, agreements that are illegal, contrary to state and
federal consumer rights laws and regulations or something of that nature can
have non-bankruptcy legal solutions. If your life has happened to changed
towards the worst (lost job, sick spouse, etc….), then it usually doesn't give
you a legal excuse or the legal right to stop paying your debts.
A vast variety of non-bankruptcy options include:
Trying to negotiate with your creditors for a more favorable repayment plan;
having the payments extended and reduced more than previously agreed, changing
the interest rate, having the principal balance decreased, interest completely
discontinued, etc. The downside with these alternates is that it is entirely
the creditor's decision whether or not to work with you. A bankruptcy requires
them to give you the legal alternatives under the bankruptcy code.
You may want to use a professional credit counseling/workout specialist to get
a better payment plan. Be cautious though, since this industry is under close
supervision by both the US
Justice Department and the IRS for handling past cases improperly. You should
understand your given arrangement before you agree to it.
Understand that when any debt is pardoned by settlement, in part or in full, outside
the bankruptcy code, it may be held as taxable income for you for that same
calendar year. If you settle or reduce debts outside the bankruptcy code and
the creditor files a 1099 form with the I.R.S. reporting the forgiveness of
debt as income, then you could be hit with a very large tax bill. Remember
taxes are seldom dischargeable in bankruptcy. Therefore, it is often advisable
to use the protection of filing bankruptcy to prevent this trap. This usually
does not occur if you file bankruptcy. Mr. Hardy has taken courses and
maintains a library regarding tax and bankruptcy matters.
Getting a consolidation loan or mortgage loan is a way to combine your debts
and increase your stream of money. You want to ensure that you are not
worsening your situation by giving up equity, as security for the new loan, in
an asset that creditors now cannot legally take from you, (See Mr. Hardy’s
section ”Protecting your Assets”). This could get you in a situation causing
you to have higher debts and fewer protected assets than before the consolidation
loan or second mortgage. That is why it is so important to take advantage of
Mr. Hardy’s free consultation and bankruptcy evaluation BEFORE GETTING A SECOND
MORTGAGE OR CONSOLIDATION LOAN!!!!
Another option is you can sell assets to pay debts. It is still a good idea to
get your free consultation and bankruptcy evaluation before you sell beloved or
enjoyed assets to only partially pay debts that will rise again shortly with
interest and late fees. Also, if the proceeds of the sale(s) do not pay all
your debts, then without bankruptcy you need to have enough income to pay the
rest of your debts.
It’s hard to simply hang on and deal with creditors, hoping you don’t get sued
before things can get worked out.
In conclusion, and to reinforce my opinion, any of the non-bankruptcy options,
above, if you have the resources would be best if you have a future need for
obtaining credit. Some of my older clients have little concern about future
credit due to their stability in lifestyle; some of my younger clients are
concerned about purchasing a home in the future. Let me refer you to my “Bankruptcy
And Future Credit” section for more information.
You
could work something out with the creditors, which will improve your situation
and propose a solution that would work rather than a continued inability or
refusal to pay. Good attorneys will go over all your options, including
bankruptcy, when you meet. It’s good to know how all options would affect your
life before making a decision.
The days when you could escape to Georgia’s Colonies, Australia, or
move out to the Wild West are gone. Credit controls everything now and it’ hard
to ignore for long. Our consultations for bankruptcy are free. You should
ALWAYS take advantage of a free evaluation before getting a consolidation loan
or a second mortgage. The reason is if you cannot pay the new loan, then you
may have created a situation where you lose your home and other secured
property and bankruptcy at this point
might not accomplish as much as if you had not gotten the loan or had
filed bankruptcy earlier.
