In many cases, the best option when facing debts that you can no longer pay is to file bankruptcy. However, while this is the option that offers you the best future financial safety, this isn’t the only option.
It is important to remember that this method only works in situations where the creditor (the person you owe money too) has no way of legally enforcing the debt. This can work with casual money loans between friends and family where there has been no paperwork signed, but of course, this won’t make you popular!
The ‘do nothing’ method can also work when you have nothing of worth to give to your creditors. For example, if you live with your parents and own nothing of value and have no savings in the bank, there isn’t anything that the creditors can take from you.
Overall though, this method can leave you feeling stressed or anxious so it isn’t widely recommended.
If it is your business that is in debt then there may be some alternatives to bankruptcy available to you. You may be able to increase the amount of time that you have to pay back the money you owe, which gives you a greater chance of affording debt payments; this is known as an extension. You may also be able to combine the amount you owe from each credit, and with their agreement, pay one lower amount; this is known as debt composition.
You’d be surprised how many creditors are willing to discuss the terms of your debt and change the terms to help you to repay what you owe more easily. This is because many creditors would prefer to receive 75% of what is owed over nothing at all.
How to Get a Debt Extension or Composition
The best way to start the process of extending debt repayments or ask for debt composition is to complete bankruptcy forms. This is because the forms require you to fill out a lot of relevant information which helps your creditors decide whether you are suited to an extension or debt composition. You don’t need to file the bankruptcy forms until the decision has been made.
Filing for bankruptcy isn’t the right solution for everyone. The determination of whether or not bankruptcy is an appropriate debt relief solution for your will be made based on a number of factors including the type and total level of your debt. Use this form to schedule an appointment with one of our bankruptcy attorneys. The consultation is completely free and there is no obligation.