In today’s difficult economic times, many good, hard working people find themselves unable to pay all of their bills, and still provide for basic necessities, such as food, shelter and medical care. This often results from unemployment, or the inability to keep up with mortgage payments in our collapsed real estate market.
For many people, bankruptcy is an acceptable option to obtain a fresh start, by asking a federal bankruptcy court to wipe out, or eliminate, one’s debts.
Bankruptcy is not for everyone.
Here are a few reasons why. First, you have to qualify for filing under the bankruptcy code. Second, you may have to give up certain assets to the bankruptcy trustee in order to pay some of your debts. Third, you have to live with the social stigma of bankruptcy.
While bankruptcy is an appealing and appropriate option for many, it is not for everyone. Bankruptcy might jeopardize your job, or negatively impact a small company that you own. You may have assets that you wish to keep, and that you otherwise might have to give up in bankruptcy, assuming that you qualify for bankruptcy in the first place. And, many people simply want to avoid the stigma, whether real or perceived, that goes along with a bankruptcy filing.
There are other options. Creditors realize that many consumers simply can’t afford to pay all of their debts. Faced with the reality that they will get little or nothing if the consumer files bankruptcy, many creditors are willing to make a deal, and often will settle the debt for a meaningful discount on what is owed. Sometimes an agreement to settle your debt can be reached prior to the start of litigation between you and your creditor, and sometimes a settlement may be reached during the litigation process, or after the creditor obtains a judgment on which it can’t collect. While these options almost always result in the consumer paying more to settle their debt than if they had filed bankruptcy, it is a viable option for those who conclude that bankruptcy is not the right option for them.
Alex N. Law, Jr. is a founding shareholder of Wites Law Firm The firm’s main office is in Lighthouse Point, Florida, and it has satellite offices throughout South Florida, as well as in various states. The firm’s practice areas include the representation of injured persons and their families in personal injury and wrongful death actions, investment disputes, and class actions; immigration; the representation of consumers in lawsuits and pre-litigation collection efforts brought by creditors, as well as in bankruptcy; and commercial and civil litigation.