Not everyone should file for bankruptcy. As a Barrington Hills bankruptcy attorney, I meet with many potential clients who are looking for bankruptcy alternatives. There are several bankruptcy alternatives if you’re not thinking of filing a bankruptcy. You can always work out a payment plan with a creditor if the creditor is willing to have that payment plan. Sometimes creditors want a lump-sum payment, or they’ll decide to garnish your wages or try and hit your bank account. Not every creditor is willing to work out an installment payment plan that’s going to take a long time to pay off. Creditors typically want money as soon as possible, because the longer you’re in a payment plan, the longer you have a chance of defaulting and stopping with the payments. Most creditors would like to take a lump-sum payment for less than the total amount owed in exchange for getting the debt paid off. If you have the funds available, this can be a method of avoiding bankruptcy.
Another bankruptcy alternative is to find a way to cut a deal with the creditor and cut the balance down, either in half or 60 percent or 70 percent, and find a way to get them paid. Some people are sitting on money in a bank account, but they might have a judgment out there. Those people can work a deal with the creditor whereby they pay less than what’s owed in exchange for a complete elimination of the debt.
Another thing you can do if you’re trying to find an alternative to bankruptcy is to do nothing. You can actually let creditors call you, harass you, send you letters, take you to court. They may even acquire a judgment against you. However, many creditors will not take it to that level. Many creditors will hire collection firms which will do nothing more than call you and send you letters and will never actually file a lawsuit. They can ruin your credit, they can harass you, they can bother you, and they can call you; but if they don’t actually take you to court and get a judgment against you, they have no significant legal means of collecting the debt. If they do not take you to court, then you likely will not have to make a bankruptcy claim. If they do take you to court and get a judgment against you, now you have to worry about wage garnishments, you have to worry about bank citations; you have to worry about being brought back into court on a citation to discover assets. A citation to discover assets is a legal proceeding whereby the creditor forces you to come into court and show what you have in terms of property, income, assets, and expenses. It’s basically a collection mechanism where a creditor can then decide if they want to do post-petition collection remedies such as a wage garnishment or a bank citation.
Remember, you can always decide it is best to stop the collection efforts and find a bankruptcy lawyer. There are literally hundreds of lawyers in the large metropolitan cities that can assist with a bankruptcy filing. If you live in a small town, your options may be limited. However, there is always a lawyer close be. Just make sure that the lawyer is versed in bankruptcy law.