Bankruptcy Attorneys with Over 3 Decades of Experience
Helping You Find Alternatives to Bankruptcy in Tacoma and Pierce County
Bankruptcy is not for everyone, even when a person is under unmanageable amounts of debt. The bankruptcy process was created to help consumers get out from under debt because of unexpected financial hardship, or simply because of poor financial decisions. There are other options for finding relief, however, and Washington Fresh Start can help you understand exactly what options are available for your situation. Although there are numerous benefits of bankruptcy, filing for bankruptcy has a few down sides that may be entirely avoidable by pursuing an alternative.
Loan Modifications & Debt Negotiation
The most basic alternative to filing for bankruptcy is to simply do nothing. If you owe money to creditors but have a small (or no) income, you may be considered judgment proof — also called collection proof. Being judgment proof means that creditors would have nothing to take from you if they decided to sue you in court. Also, in some cases, creditors may decide to simply write off your debt rather than pursue repayment, and in seven years, that debt would be erased from your record. Still, keep in mind that if your financial condition does improve, you may no longer be considered judgment proof and creditors may approach you once again for repayment of debts.
A second possibility is to negotiate with creditors and to work out an individual payment plan. However, this process can be daunting, especially when dealing with creditors who are particularly aggressive or intimidating.
Instead of personally negotiating with creditors, you can contact a debt management agency for help. These agencies are nonprofit entities, and a listing of them can be found on the United States Trustee’s Web site. Working with an agency means that no bankruptcy will appear on your record. But there is a drawback to working with a debt management agency: you won’t have the protections provided by Chapter 7 or 13. Namely, agencies often require debts to be paid in full, and they can cancel your plan if you fall behind on payments. Another common concern related to debt management agencies is that they are heavily funded by creditors, a situation which may produce a conflict of interest for the agency
Most realistic alternatives to bankruptcy come out of negotiation with your creditors. Your creditors may be far more understanding than you might think when it comes to modifying your loan. Some repayment is better than none, which means that they may very well agree to a loan modification if it is the only alternative to bankruptcy. Your interest or principle could be reduced, or the term of your loan could be extended, each of which will result in lower monthly payments. You could also pursue debt consolidation to eliminate excess interest rates, or you could negotiate for debt settlement that allows you to pay one lump sum that is less than you owe, but is considered to be full repayment by your creditor. Note that these solutions may only be available if you have few creditors and resources available to settle the debts.
Restructure Your Mortgage
If you’re paying off your home, another method is to restructure or refinance your mortgage. By arranging a new mortgage payment plan, you may be able to save some money to put toward paying down your debt. We usually do not recommend refinancing if you are going to be paying off unsecured debts with the proceeds, as you are turning unsecured debt that could be discharged in a bankruptcy into secured debt that can no longer be discharged.
There are two basic ways changing up your mortgage can aid you in averting a bankruptcy filing. First is to negotiate an agreement with your housing lender to reconfigure your mortgage under a new payment plan. See if you can devise a new or temporary payment schedule under the same terms of your original mortgage. A second approach is to refinance your mortgage altogether, which may include applying for a lower, adjustable interest rate stretched out over a longer period of time. This solution becomes less available if your credit score has already deteriorated.
Find A Bankruptcy Attorney in Tacoma
Attorney David Yando has more than 30 years of hands-on experience in bankruptcy and other forms of debt relief. If you are looking for an alternative to bankruptcy, we can provide the counsel and guidance that you need. You will have the full attention of your lawyer throughout your case and will be able to find financial freedom sooner than you ever thought possible. We offer easy payment plans, as well as a free case evaluation, so you have nothing to lose by consulting with a Tacoma bankruptcy lawyer from our firm. Contact us today!