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Non-Bankruptcy Options Can Solve Financial Problems
Most clients we consult with express hesitation or fear when it comes to the possibility of filing bankruptcy. This is normal, in most cases, as bankruptcy should serve as a last resort approach to solving financial troubles. Whether it be the cost of filing bankruptcy, the potentially negative credit impact, or even a general reluctance of seeking court involvement, there are many other alternatives that should be discussed by your attorney:
Negotiate Your Debts:
This approach involves working through your debt problems with your creditors. Many creditors are willing to work out payment plans provided the individual can demonstrate an ability to maintain payments under the plan. This approach is easier when the individual has only a few creditors or the amount of the debt is relatively low, and can be a good strategy in lieu of filing Chapter 7 bankruptcy.
Debt consolidation involves seeking the help of a credit counseling or consolidation agency to intervene with your creditors on your behalf to negotiate a global payment plan. If successful, typically one payment is made by the individual and the agency makes payments to the creditors. Once again, this approach is more difficult as the number of creditors or overall outstanding balances rise, which is why individuals often use Chapter 13 bankruptcy as a way to force their creditors to participate in the payment plan.
Fair Debt Collection Practices Act:
Law requires that creditors treat you fairly in attempting to collect debts owed by an individual. The activities of debt collectors in Texas are governed by the Texas Debt Collection Act, which prohibits the use of fraudulent and abusive collection efforts to obtain payments on outstanding debts. If your main reason for contemplating filing bankruptcy is to stop this type of harassment, you may have a claim against the debt collectors that could keep you out of bankruptcy.
Many individuals are considered judgment proof, which basically means that if a creditor obtained a judgment, there would be nothing to collect the judgment against (i.e. assets). In Texas, creditors cannot garnish wages for the collection of consumer debts. Wages may only be garnished to collect court-ordered child support, back taxes and defaulted student loans. Depending on your particular financial situation, doing nothing could be a viable option.
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