A Comparison of Debt Reduction Solutions

When attempting to compare debt reduction solutions, the most influential factor is the extent and nature of the debts. Furthermore, it is relevant to note that debt reduction solutions do not progress parallel to one another, but rather, the debt reduction process functions on a continuum or staged process. For example, any person attempting to file bankruptcy, in most cases, is required by law to exhibit that he or she has take previous steps to reduce his or her debt. Moreover, in reality, this makes sense; an individual stands to lose quite a bit through bankruptcy, especially if other less invasive options are available.

Starting the Debt Reduction Process

From the onset, an individual will be faced with a large and varied number of ways to reduce his or her debts. In practice, the last option available will be through bankruptcy, first Chapter 13 and then, if applicable, Chapter 7. Before any of this occurs, and often as a natural response to growing debts, individuals will take steps to reduce their debt. However, in a concentrated effort to reduce debts, an individual debtor must be acutely aware of his or her options, in light of the individual debts owed and the income of the individual debtor. In most cases, having legal counsel at this point is essential.

Alternatives to Bankruptcy

The first place to start, after garnering an accurate depiction of a debtor’s current debts, assets, income, and expenses, is with the creditors themselves. In certain cases, simple budgeting and financial planning techniques can help a debtor repay existing debt obligations without even consulting a creditor. However, in practice, most individuals will contact creditors and attempt to arrange a debt settlement or consolidation agreement. In short, any of these attempts will seek to reduce the principal balance owed, prevent collection attempts, and work out a feasible repayment plan for the debtor.

As part of many creditor negotiations, an individual debtor can greatly benefit from the insight and representation of a bankruptcy or debt consolidation lawyer. If an individual debtor does not have success with negotiating with creditors on their own accord, or simply does not feel adequately prepared to handle such actions, seek outside help is always a good idea. However, being smart about where to find outside help is important. For individuals, a lawyer or a non-profit, government sponsored credit and debt counseling agency is one’s best bet.

Getting Legal Help with Comparing Debt Reduction Solutions

In the event alternatives to bankruptcy cannot reign in an outstanding and growing debt situation, an individual always has the option to file for bankruptcy. Whether the courts will approve such a filing is a case-specific consideration. However, before filing and as part of any debt reduction attempt, it is highly advisable for individual debtors to seek insight, information, and representation from a lawyer.