Due to the coronavirus pandemic, many people who may never have thought they would be in financial trouble are considering filing for bankruptcy due to lost income. But before filing for Chapter 7 or Chapter 13 bankruptcy, it’s important to be aware of all your options.
Bankruptcy should never be the first option for debt relief, even though it is often suggested by lawyers prematurely. When you file any form of bankruptcy, you’re making a serious commitment to long-term, negative credit score effects, and filing for bankruptcy isn’t free.
If you file for bankruptcy, you may not have access to credit for some amount of time or be seen as a reliable borrower and you’ll have to pay filing fees. The following steps are worth taking before you consider filing for bankruptcy:
Consult a Debt Management Expert
It’s essential to consult with those trained in debt management and financial planning before you consider filing for bankruptcy or meeting with a bankruptcy attorney.
Although bankruptcy attorneys might offer free consultations, they are not going to likely spend this time discussing the alternatives to bankruptcy available to you. Because they typically bill per hour and only get paid if you file for bankruptcy, they might push this option when it may not actually be the best option for you.
Meeting with a debt management expert can help you through a self-assessment with no judgement and allow you to consider as many other options as possible to see if bankruptcy is really in your best interest.
Try Debt Settlement and Negotiations
Debt settlement and negotiation, also known as arbitration, involves a debt relief agency negotiating with the creditor on your behalf to convince the creditor to allow you to pay back a settlement amount rather than the full debt sum.
Most lenders are willing to negotiate to ensure that they will receive a partial amount of the debt you owe, rather than lose all of it if you file for bankruptcy. The settlement amount is a lump sum that you would pay all at once that is less than the actual debt you owe.
During the pandemic, many companies are willing to negotiate special payment plans, wave late fees, and suspend mortgage and rent payments—but they’re not going to offer these things to you unless they are asked about it. And if you’re up to date on all of your payments, no creditor is going to settle with you, so to consider this option you would have to be significantly behind on payments, which does affect your credit score.
Consider Debt Consolidation
You may be able to borrow money from one source at a low interest rate and use it to repay loans that were taken out at a higher interest rate. This can allow you to pay off your debts faster and take away some stress by consolidating all of your debt into as few lenders as possible.
Bankruptcy has a practical impact on your financial future for a period of time. At PCS Debt Relief, a certified debt specialist will walk you through alternatives to bankruptcy and will only recommend it if it’s really the most feasible option for you. And if it is the best solution, we will recommend one of our trusted bankruptcy lawyers to walk you through the process. For debt settlement and debt negotiation, PCS Debt Relief offers no up-front fees, no monthly fees, and no cancellation fees. Free consultation
For most people, financial strain is not the only problem. Having multiple creditors demanding money from you on a monthly basis can be overwhelming. At PCS Debt Relief, we want to help you start over, clear your debt, and start rebuilding your financial future. We understand the burdens and stress that debt creates, and we’re here to help you every step of the way. Call (636) 209-4481 for a free consultation to achieve financial stability.
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