Overview
Loan Modification
Do Nothing
Budget
Balance Transfer
Borrow From Family
Borrow From Savings
Second Job
Boarder
Debt Relief Companies
Scams

OVERVIEW

Before filing for bankruptcy you should review the alternatives with your attorney. Do not sign anything (any deal) with “debt relief” companies or any other individual or company without a review by your attorney. Never! Read my lips!

LOAN MODIFICATION

In situations where foreclosure is involved, the most common, straightforward alternative to bankruptcy is a change in the loan. These deals are described in various ways such as loan modification, negotiations, settlement, debt relief, workouts. They are often used interchangeably. Loan modification is probably the most used. In any event here are the results you should try for. Often you can negotiate more than one.

-Lower the interest rate
-Agree to a freeze in the interest rate
-Lower the payments
-Forgive some of the debt, for example forgive the amount you are behind in your payments
-Lengthen the payment period
-Settle the balance due – in some cases the creditor will not budge but others might go as low as 25% or less

DO NOTHING

You are Judgment Proof if most or all of your income is from government programs (Social Security, Workers Compensation, Disability) and (b) most or all of your assets are exempt under the law (Social Security, Disability, furniture, some appliances). Therefore a judgment creditor can't collect from you.

BUDGET

Take a hard look at your financial situation. Prepare a budget and cut out or reduce unnecessary expenses. This will probably be too little or too late. But it is a terrific way from avoiding financial disaster after Chapter 7 discharge or for complying with a Chapter 13 payment plan.

BALANCE TRANSFER

Transfer a balance from a high interest rate card to one with a lower rate. Usually too little and too late.

BORROW MONEY FROM FAMILY

You may have family or friends who can loan you money to help pay off high rate debts. This works sometimes. Requirements: Your potential lender has the money; is incredibly generous and trusting; you can swallow your pride.

BORROW MONEY FROM SAVINGS

Depending on your situation, it may be an option for you to borrow against your IRA or 401(k) to pay off credit cards or loans that have a high interest rate. Usually too little or too late.

SECOND JOB

Probably impossible in this Economy. But perhaps you can get some overtime pay.

BOARDER

. If at all practical this should at least be considered.

DEBT CONSOLIDATION LOANS

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Debt Consolidation Loans are offered by “Debt Relief” Companies. This is one of the most common solutions people think of when they fall into financial difficulties. Many people who get a debt consolidation loan find themselves in much deeper financial trouble than they were in to begin with.

You will still pay back 100% of the debt consolidation loan, plus interest. The interest rate is sometimes lower than before, but this is because debt consolidation loans are usually secured loans that cannot be lowered or negotiated. Once you sign up for a debt consolidation loan, you have just gone from an unsecured debt to a secured debt and have put your personal assets (e.g. your car or home) at risk. At that point if you can't pay your bills your creditors can come and take your personal property – thus creating a bigger program than you had to begin with.

Bankruptcy is usually a better solution.

The biggest problem with Consolidation loans is that they are often scams.

DEBT RELIEF (NEGOTIATIONS)

Also offered by the “Debt Relief” Companies. These companies offer to negotiate settlements with your creditors. The amount you pay is usually not worth the results. They often ask you for large up-front payments. Many will take obscene profits or they are outright scams. Plus you can probably negotiate better deals yourself. If not, a Bankruptcy filing is usually a better solution.

CREDIT ASSISTANCE/DEBT MANAGEMENT

These companies purport to help you with respect to unsecured loans, by lowering payments, reducing interest rates, eliminating late fees, Too little, too late. Plus many of these companies will rip you off. Besides, you can probably have more success negotiating by yourself or by filing bankruptcy.

SCAMS

Under no circumstances should you retain a “Debt Relief” company without clearing it with an attorney. Never! Read my lips!

Questions? Call me on my cell now at 502-592-9771 so we can discuss your choices. I will pick up personally. 502-592-9771.