Avoiding Bankruptcy

I don’t think that anyone sets out to file bankruptcy.  In fact, most people would rather explore their alternatives and try avoiding bankruptcy.  After all, if you can get out of debt without having to file for bankruptcy, you are better off, right?  Well, it really depends upon the nature of the debt and the financial circumstances of the debtor.  It also has a great deal to do with whether the creditors are receptive to a settlement.  Not every creditor is anxious to assist someone who owes money.  Many creditors will hold out for big money or threaten to garnish wages or clean out bank accounts.

One major alternative to bankruptcy is to work out an installment payment plan with your creditors.  This is possible if you have the ability to make in installment payments and if the creditor is willing to accept such payments.  The creditor will likely want to know more about your financial situation than you are willing to give.  For example, the creditor will probably want to know where you work, whether you rent or own and what your budget is per month.  If you are simply unable to pay monthly, you may be best just to claim bankruptcy.

In Illinois, a Chicago bankruptcy lawyer can advise you on all of your legal rights.  Maybe the creditor is trying to take too much per month in an installment payment plan.  The lawyer will be able to tell you if that amount is more than the creditor would receive should there be an actual wage garnishment.  Never assume that the creditor is being straight-forward with you.  Their job is to collect as much as possible as soon as possible.  They are fully aware that you have the option to seek bankruptcy protection at any time during the process.  If they can get a payment or two prior to you filing for bankruptcy, then they have at least salvaged some repayment of the debt.

Thus, in addition to your non-bankruptcy options, you had best understand your bankruptcy options.  You have two basic chapters of the bankruptcy code at your disposal.  The first is chapter 7 which is also known as fresh start bankruptcy.  That is where someone with little or no assets can gain a fresh start.  The other chapter is chapter 13.  That is where a person repays either all or a portion of his debts over a three to five year period.  Chapter 13 much more complex than Chapter 7 and you would be best served with the help of a talented attorney.