Alternatives To Bankruptcy For Settling Unsecured Debt

Secured and unsecured debt may be discharged during bankruptcy. However, it is possible that some individuals will want to find other means to settle that debt without having to file bankruptcy. There are options available, but these are dependent on the willingness of the lender to work with the borrower. In many cases, the best ways to settle secured and unsecured debt is through the use of an attorney.

Finding Solutions

The first step in handling any financially challenging situation is to speak with the lender directly. The lender may be able to work with the borrower to arrange a short term solution, such as help in getting caught up when the borrower cannot make a payment due to other financial obligations.

However, after this point, the borrower may need to take more significant steps to reduce the amount of debt he or she has to repay. The following are some of the options to avoid bankruptcy.

Work with the creditor through a stepped up repayment plan. This may rework the debt to make the payments smaller. This may be an option for personal loans.
Work with a debt settlement company to handle repayment of the debt. The debt settlement company will collect monthly payments from the borrower until a settlement amount is reached to pay off the lender.
Settle the debt for less than what is owed through debt settlement you negotiate. This can be one of the best routes to take when you have the ability to pay a significant amount of money towards the debts but not all.
Use a credit counseling service to negotiate on behalf of the borrower with lenders to close and repay the debts over time. These professionals may be able to help the individual to pay less on his or her debt.
Work with an attorney to determine other possible options, including lawsuits against creditors who break debt collection laws, if applicable.

In many situations, filing bankruptcy is the best course of action because these other methods of getting rid of secured and unsecured debt are not working. Your attorney can help you to determine what your next step should be, before filing bankruptcy.

Hiring an Attorney

Individuals who are looking for ways to repay or settle debt should utilize the services of an attorney. Many bankruptcy attorneys also provide debt settlement information and tools for individuals. In many situations, these attorneys can help individuals to make the right decision for their unique financial situation as they work towards getting out of debt.

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