Sorting Out Alternatives With Florence Bankruptcy Lawyers

In Credit Repair of CreditGuru (August 28, 2009 9:06 pm)

By the time you are reading this, you have probably passed the point where alternatives to bankruptcy would work for you.  Granted, these opportunities exist and for those  whose state of affairs is mildly distressing, these solutions may turn their financial problems in a positive direction.  But for most of us, by the time the word bankruptcy enters our vocabulary, we are already past the point of no return.  Florence bankruptcy lawyers can step in to assist at this point and prepare your bankruptcy petition for you. 

Some of those alternatives and why they may fail are: 

Informal arrangements with creditors
Making informal arrangements with mortgage holders or credit card companies may seem like a good idea, but can often carry unforeseen consequences and even deepen your financial problems.  Credit card companies often have in the fine print of your contract with them the proviso that they can raise your interest rate and lower your credit limit at any time and for any reason.  Hence, a well-intentioned phone call to the credit card company to try and delay or reduce the payment due may result in your interest rate being increased or worse, doubled.  Also, as an added bonus, some credit card companies retain the right to apply this increased interest rate to your existing balance, not future balances, leaving you more indebted than when you began.

Consumer credit counselors
This term covers a wide variety of businesses with a wide assortment of intentions and expertise.  As debt levels have risen, so have the number of questionable businesses advertising themselves as saviors to your credit woes. They claim to be able to restore your credit or negotiate with your creditors – all for an up front fee, usually a hefty one.  However, oftentimes, the debtor is left with more arrearages and emptier pockets as the professed credit counselor slips away into the night with the up front money. 

The workout
Another more formal arrangement is the workout.  A workout is a mutually negotiated and agreed upon agreement between a debtor and his or her creditors in which terms for repayment are defined.   A “composition” workout is a contract between a debtor and his or her creditors in which the creditors agree to accept a reduced amount of money for settlement of the debt in full.  In an “extension” workout, the creditors agree to accept less money over a longer period of time until the debt is paid in full.    A Chapter 13 bankruptcy does all of the above, except you are negotiating these payment terms while under the protection of the Chapter 13.  Florence bankruptcy attorneys can help you determine, under the new bankruptcy reforms, whether a Chapter 13 bankruptcy is for you or if a Chapter 7 bankruptcy would better fit your circumstances.

Additionally, as the rate of bankruptcy filing has increased, so has the incidence of unscrupulous characters in the credit repair and credit counseling field.  Promises of miraculous cures for indebtedness without cost or consequences abound.  Life does not work that way and no cure is going to be pain free.  Consider carefully your choices and make the best decision possible.  Contact bankruptcy attorneys in Florence for help.

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