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Bankruptcy Alternatives

What are your bankruptcy alternatives? Personal bankruptcy has received a lot of attention in recent years. In October of 2005, the Bankruptcy Abuse and Consumer Protection Act (BACPA), became law. It was a fairly sweeping legislative reform to the consumer bankruptcy filing process. While the details of the reform are many, simply put, BACPA essentially made it more difficult for consumers to file a Chapter 7 Bankruptcy petition.

Essentially, there are two types of bankruptcy petitions a consumer can file, Chapter 7 and Chapter 13. (NOTE: I’m NOT an attorney. You should seek the assistance of a bankruptcy attorney when making your final decision to file BK. The information presented here is merely for educational purposes and not intended to convey any kind of legal advice whatsoever).

Chapter 7 is where you basically wipe the slate clean and start over. Chapter 13 is where you work out a new payment plan with the creditors listed in the petition. The process can be comprehensive and, to some degree, uncertain. In both cases, you have to hire a bankruptcy attorney who can help you determine what type of petition you should file. Usually, you’ll have a complimentary interview with the attorney, then you’ll have to pay them some sort of retainer. What you need to understand here, is that when you sign an agreement with an attorney, and hire them to file your petition, they pretty much become a new creditor. And they’re probably going to want to receive some form of payment before they really dig in and go to work for you. It only makes sense because they’re not going to work for free. bankruptcy alternatives

After you’ve hired an attorney to prepare your bankruptcy petition (Chapter 7 or 13), you may have to wait several weeks for something that’s called a 341 hearing. This is where you appear in court before a Trustee. The Trustee is kind of like a judge, and will render a decision as to whether or not your debts will be discharged or not. If they’re discharged in a Chapter 7, then you won’t have to pay them back. In the case of a Chapter 13, then the payment plan will be determined and set by the court. I’ve asked a number of sources about the success rates of Chapter 13 programs, and seem to get a different answer with each inquiry.

If things have gotten so financially challenging that you’re considering filing for bankruptcy, then you may want to consider debt settlement, which can be a viable bankruptcy alternative. In my book, The Debt-FREE Millionaire: Winning Strategies to Creating Great Credit and Retiring Rich, I explain that debt settlement can be a safety net just above bankruptcy.

In recent years, debt settlement has become a more widely recognized bankruptcy alternative. Each month debt settlement helps tens of thousands of people find the financial relief they need and avoid the bankruptcy process, which can be rather embarrassing. But, one problem with debt settlement is the process of choosing the right debt settlement company.

When considering service like debt settlement, choosing the right company is absolutely critical. In my opinion, there are 6 keys to look for when hiring a debt settlement company. As you’re looking to make a decision regarding which debt settlement company to choose - remember one thing - YOU, are hiring them.

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