When getting behind in debt, people often try alternatives to bankruptcy first in order to get caught up in their finances. Some methods include borrowing money from banks or family members to consolidate or catch up on your debt. What often happens is you find yourself with an extra bill to pay, so you didn’t save yourself any money after all.
Sometimes working with your creditors can be successful. When it fails, it is usually because the creditor was unflexible or because you were unable to make the agreed-upon payments.
Credit Counseling Programs
Enrolling in credit counseling programs can be another option people take to get caught up on their debt. Up to 80% of those enrolled in credit counseling programs fail to maintain the terms of the debt management plan. Sometimes creditors get tired of waiting for their money in these programs and file a lawsuit anyway. They might decide they can get more on the loan in a lawsuit instead of negotiating for a lesser amount.
Unsecured creditors like credit cards, medical bills, late utility bills or payday loans may file a preemptive lawsuit if they know you will be enrolling in a debt management plan where they may only get a portion of the loan back.
No matter the other methods you tried, if you were unsuccessful in eliminating your debt, you may want to consider filing bankruptcy. Chapter 7 bankruptcy can eliminate your qualifying unsecured debt in as little as three to six months. Chapter 13 bankruptcy is for those that have secured assets like a home or vehicle they would like to keep. A Chapter 13 repayment plan can last three to five years, giving you a chance to catch up on your back payments. At the end of that court-approved time, all of your remaining qualifying debt will be eliminated.
If you have questioned whether bankruptcy is right for you, contact a Dallas bankruptcy attorney to find out what options you may have.