Bankruptcy Alternatives
Bankruptcy Alternatives: Are There Any?
You may have a pretty good idea about how a financially distressed debtor file for a Chapter 7 or a Chapter 13 bankruptcy case and what you may do to get out of it. Before you even decide whether these bankruptcy types are good solutions, however, you should consider available alternatives. Although bankruptcy filing is the only reasonable remedy for most people with acute debt problems, alternative course of action often makes better sense for other debtors.
Do Nothing
Amazingly, the best approach for a few people who are badly in debt is to stay still and take no action at all. In most cases, you won’t be thrown in jail when you are unable to pay your debt, and the creditors simply can’t collect their money from you if you just don’t have it
Negotiate With the Creditors
If you have assets you are willing to sell or you have adequate monthly income, you can be a lot better off talking terms with your creditor than filing for bankruptcy. An effective negotiation may buy you enough time to fix your financial situations and to get back on your feet, you and the creditor may agree to peacefully settle your debts with an amount less than you owe.
Creditors simply hate it when debtors do not pay their debts. They do not like the trouble of instituting collection proceeding, or the likely prospect that the proceeding will turn debt-owing clients into former clients. To keep loyal customers and to avoid the difficult collection process, creditors occasionally lower the debtor’s expected regular payments, extend the payment period, lower the penalties for late fees, and make other adjustments. They are most likely to be permissive if they believe you are doing an honest effort to handle your debt issues.
Get Outside Assistance to Design your Repayment Plan
Previously, the combination of quick access to information (particularly on the Internet) and high consumerism led to a big explosion in the number of debt counseling agencies and credit.
Some offered limited services, such as debt repayment and budgeting, while other agencies offered a wide range of services, from financial planning to debt counseling. At this moment, however, the advent of latest requirements for credit counseling services and agencies in the new bankruptcy law, and also the aggressive auditing policies adopted by the IRS toward non-profit counseling agencies, has dramatically changed the credit counseling business landscape.
Chapter 11 Bankruptcy Filing
Chapter 11 bankruptcy is usually used by financially struggling companies to reorganize their financial affairs. However, this alternative is also available to individuals. A financially distressed Individual who considers Chapter 11 bankruptcy filing may have higher debts than Chapter 13 bankruptcy filing limits-$1,010,650 for secured debts and $336,900 for unsecured debts or other major nonexempt assets, such as high-value real estate assets. The first filing fee is around $840, compared to $275 for Chapter 13 or $300 for Chapter 7 bankruptcy. Additionally, the quarterly fee must be paid, based on the disbursements percentage that is used to pay your present debts. This fee runs from $250 for every three months if the disbursements are under $15,000. The fee need to be paid until the reorganization plan is either authorized or dismissed, or the case is converted to become a Chapter 7 bankruptcy. Nearly all attorneys take up a minimum of $7,500 for retainer fee to manage a Chapter 11 bankruptcy filing. Add this to the Chapter 11 bankruptcy expensive court fees, which in a year could be about $1,000 to $10,000, and as you can see Chapter 11 is not for everyone.
Chapter 12 Bankruptcy Filing
Chapter 12 bankruptcy is nearly identical to the Chapter 13 bankruptcy. To be fully eligible for a Chapter 12 bankruptcy case, at least eighty percent of your current debts must arise from the family farm operation. The filing fee for the Chapter 12 case is about $230. Chapter 12 bankruptcy has its own procedures and rules, which are not covered in this article. See your lawyer if you wish to file for a Chapter 12 bankruptcy case.
This is an Original Article written by the DefeatBankruptcy.org Staff
and may not be reprinted in any form without prior written approval.
