Many Modesto residents find themselves considering bankruptcy to get rid of or pay down outstanding debts. As you educate yourself on your bankruptcy options, it's also a great idea to consider alternatives to bankruptcy. With the help of a bankruptcy lawyer and depending on your financial situation, some of these techniques might be helpful before you file for bankruptcy:
Negotiate Your Unsecured Debt. Credit card companies (one of the primary sources of unsecured debt) will sometimes work with you to negotiate down your debt without having to file for Chapter 13 (reorganization) bankruptcy. Since they are the last to get paid when you file for bankruptcy, it is better for most companies to settle your debt for a lower amount.
Surrender Your Property. Basically, this is like acting as your own repo man without the unexpected visit. This method works for secured loans, such as those for large appliances, cars, boats or electronics. Simply ask the retailer if they'll take back the item. You won't likely get any money back, but you will eliminate that payment. You can also sell off your high-priced possessions to the highest bidder, but this is likely to still leave you with a monthly payment until the original debt is paid off.
Do a Short Sale of Your Home. If you're upside down on your mortgage, you can sell your house for less than it's current market value. This is especially useful if you have enough equity built up to cover the cost of your loss. Keep in mind that you will have to work with your lenders to get their permission before you can do a short sale.
It's important to note that you may not even qualify for bankruptcy if you make too much money of if your debt is too high (more than $336,690 in unsecured debt and secured debt less than $1,010,650). If you do qualify, though, and these techniques simply aren't enough to get you out of debt, it might be time to ask a Modesto bankruptcy lawyer to explore your options for Chapter 7 or Chapter 13 bankruptcy.
