Bankruptcy Alternatives in Michigan
Bankruptcy isn’t right for everyone struggling with debt. For some, there are bankruptcy alternatives that may be more cost effective and efficient. Some of those alternatives include:
One alternative to bankruptcy is a debt settlement or debt negotiation. Debt settlement and negotiation is a process frequently used when you have a few large bills. It requires one of our attorneys to reach out to the creditor, or the creditor’s attorney, to negotiate a lump sum payment of your debt.
The goal is to get a settlement for as little as possible. Over the years, our attorneys have developed a number of different strategies to get the best deal possible.
One of the keys to a debt settlement is making sure you have the proper funds on hand. Most creditors want their lump sum payment within 30 days of a deal being reached. Therefore, it is important to have access to the funds prior to settling a debt.
Click here to learn more about the best time to settle or negotiate a debt.
Another alternative to bankruptcy is a debt consolidation plan. Debt consolidation lumps all your creditors together and requires you to make one monthly payment. It requires taking out one loan to pay off all your other loans.
The goal of a debt consolidation is to get a lower interest rate on the one loan than you currently have with your creditors. By lowering your interest rate you can often times lower your monthly payment. This should help pay off the debt in full while limiting the negative impact to your credit.
Click here to learn about what to watch out for in debt consolidations.
Fair Debt Collection Practices Act (FDCPA)
Commonly referred to as the FDCPA, the Fair Debt Collection Practices Act protects debtors against harassment by debt collectors. The FDCPA prohibits a number of things creditors do, including calling late at night or early in the morning, acting like a lawyer, threatening to put you in jail or sue you.
The FDCPA is a tool our attorneys can use to stop the harassment and in some cases, settle the debt. If a debt collector violates the FDCPA then you can sue the collector in Michigan state courts or even Federal court.
Click here to see some of the most common Fair Debt Collection Practices Act violations.
Mortgage Modification is a process used to change the terms of your original mortgage. A modification is often used when someone is close to foreclosure and needs permanent help. If you cannot afford your current mortgage due to your current financial situation then a modification could help you stay in your house.
The process is extremely tedious and can be overwhelming for some people. The bank usually requires a number of documents related to your financial situation and the documents frequently need to be updated until the modification is finalized.
Click here to see when a mortgage modification might not be your best option.
Is Bankruptcy Your Best Option?
Your bankruptcy alternatives depend on your situation. To find your best option you need to look at more than cost. Sometimes filing for bankruptcy just doesn’t make sense.
Are you eligible for bankruptcy?
When you come in for a free consultation we’ll go over all your assets and debts to see if you qualify for bankruptcy. You don’t have to have a certain amount of debt to qualify. We’re more interested in the type. There are also limits on how often you can file for bankruptcy. I wrote about those here.
What type of debt do you have?
Some debts can’t be discharged in bankruptcy. Criminal fines and penalties are common debts that can’t be wiped out. Student loans and child support are also common debts that you shouldn’t expect bankruptcy to take care of. Even if you can include a debt in bankruptcy, it might make more sense to find an alternative. For example, a short sale might help someone whose house is under water. If the home is your only source of debt then you should look at other options.
How a Michigan Bankruptcy Attorney Can Help
It’s important to consider all your legal options regarding your situation. Like any choice, there are pros and cons to the different bankruptcy alternatives. At Detroit Lawyers, we take pride in our ability to use bankruptcy alternatives to help our clients reach their financial goals. We will take the time to explain all your options so you can make the best choice for your unique situation.