Many people hit a wall financially and think that bankruptcy is their only option. However, there may be better options instead of a bankruptcy. A good bankruptcy attorney will help you find out what option is best for you. In this article we will explore alternatives to business bankruptcy.
Here are some options you may not have considered:
If only one creditor is driving the need to take action, you may be able to resolve the issue outside of bankruptcy by negotiating with that creditor. Often creditors will be willing to work with the debtor, but may require some assurance that the debtor will perform under the new arrangement, such as having the debtor sign a judgment for them to hold and enter if the debtor defaults going forward.
For tax debt, payment arrangements can often be reached with the taxing authority that are at least as good, if not better, than what can be accomplished through bankruptcy. However, unless you ask you never know if they are willing to work with you. You may be surprised that they are more willing to work something out than you thought.
Also, it is especially compelling for a creditor to want to work with you if they believe you are contemplating bankruptcy because they do not want to be bound by rigid rules of bankruptcy and they do not want to wait around for months or even years for things to get resolved.
If the problem is foreclosure, a good bankruptcy attorney will recommend a possible short sale or deed in lieu of foreclosure instead of bankruptcy. If you are contemplating filing for bankruptcy solely because your home is in foreclosure and you do not want to be liable for any deficiency, then you may want to consider other options before doing a bankruptcy.
Many lenders are open to working with the borrower on a short sale or deed in lieu of foreclosure. A short sale is where the lender agrees to allow the borrower to sell the home to a third party for less than the amount the borrower owes them. A deed in lieu is where the parties agree to allow the borrower deed back the property to the lender in lieu of the lender filing for foreclosure against the borrower. In both instances the agreement usually states that the lender will not seek any deficiency amounts against the borrower.
If you have large assets with equity those can be sold to pay off other debts. Sometimes a bankruptcy results in the debtor liquidating some or all of his assets to pay off some creditors. However, it is possible that if you own any assets that have equity, those assets can be sold and the equity can be used to pay off the creditors.
Many times, creditors are agreeable to accepting less than what is owed to them if it means they will be paid in cash in a lump sum. This is definitely something to consider before running straight to a bankruptcy.
At the Law Office of George “Dave” Giddens, P.C. our attorneys serve Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. And we have bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases in New Mexico. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Our conveniently located office has ample free parking and is easily accessible by public transportation. We offer flexible office hours upon request. To make an appointment for a consultation about your real estate matter, contact us online by visiting the firm’s website at giddenslaw.com. or call us at (505) 271-1053. Giddens & Gatton Law,amp; P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico