Alternatives to Bankruptcy

Bankruptcy is not always the best option for everybody.  You may have too many assets to even be able to file bankruptcy.  You may earn too much income to be able to qualify for the type of bankruptcy relief that you are seeking.   When bankruptcy just isn't an option for obtaining debt relief, you may want to consider your alternatives .

What Are My Alternatives to Bankruptcy

If bankruptcy just is not an option and you need serious debt relief, there are some bankruptcy alternatives.  They are not really comparable to the instant and thorough relief that a San Diego bankruptcy filing can afford you and your family.  But they are options nonetheless.  Of the bankruptcy alternatives some are not as good as other, and some should be avoided at all costs.  Here are the most common alternatives to bankruptcy and how they work.

Debt Settlement

Debt settlement, also called debt reduction or debt negotiation, is an alternative debt relief solution, albeit an expensive one, in which your attorney may recommend after reviewing your situation in detail.  Debt settlement involves individually settling each of your outstanding credit card debts or other debts for a lump sum.

Because it is an expensive remedy, debt settlement is usually reserved for when your lawyer determines that bankruptcy just is not an option.  Debt settlement allows your lawyer to settle your debts for a lump sum payment.  In San Diego, attorneys are typically able to settle debts for around 30% to 60% of the total amount that you owe, although there is no guarantee.  Some lenders require up to 80%.

Debt Consolidation

Debt consolidation is a disfavored remedy.  Most of our clients that attempted debt consolidation before retaining Bankruptcy Legal Center to help them file bankruptcy, had very poor results with debt consolidation in San Diego.  Many ended up spending thousands of dollars just paying interest charges and debt consolidation fees and years later had the same balances they started with, and they still had poor credit.  Had they filed bankruptcy they would have already started rebuilding their credit years sooner.  

Debt consolidation is a temporary band-aid.  It does not solve your debt problem and 2 years from now you’ll be in the same situation you are in today.

Loan Modification

If you need to lower your monthly mortgage payments, you can ask your lender to give you a loan modification San Diego.  However, there is one big problem with attempting to obtain a loan modification.  The decision as to whether to give you a loan modification is totally up to your lender.  You can hire a team of lawyers to attempt to force your lender to give you a loan modification, but if your lender does not want to give you a modification, it will not give you one.

Almost all of our clients that have obtained a loan modification in San Diego, obtained their loan modifications within 3-6 months of requesting a loan modification from their lenders. The fact is, if your lender wants to give you a loan modification, it will and it does not take more than 3 months to process a modification. 

If you’ve been getting the run around, and have been denied once before or repeatedly asked to send in documents, then that’s a very good indication that your lender (or the investor of your loan) does not want to give you a loan modification and it won’t.   If this describes your situation, then you should talk to a bankruptcy attorney and start considering a different solution your other San Diego debt relief options.

Short Sale

If you are unable to sell your home for a price that will pay off the existing loans against your property, you can do a short sale San Diego, provided that your lender agrees to the short sale.   

Short sales are beneficial both for clients who do not qualify for bankruptcy and for clients who have already filed and need to limit their future liability, for example, liability for HOA fees after bankruptcy or an HOA lawsuit.  A short sale may be recommended by your lawyer for after your initial attorney consultation.