Explore these options before considering bankruptcy

 Posted on June 30, 2020 in General Bankruptcy Topics

Many people with financial problems may consider filing for bankruptcy. This legal process provides individuals relief from their debt and a second chance at financial success. Though bankruptcy might be the only choice for many people in Maryland, other options might provide better solutions.

Before filing for bankruptcy, many states require that people try credit counseling and financial evaluation. Credit counselors are very resourceful and may find a solution that benefits creditors and debtors alike.

Credit counselors examine finances for opportunity

Credit counselors can help those with financial problems find solutions. By reviewing one's entire financial situation, including income, debt, savings, spending habits, and more, a counselor can professionally assess one's situation and recommend a course of action. Counselors will try many tactics before recommending filing for bankruptcy.

Financial counselors may recommend the following:

• Detailed budgeting plans: Many people could recover financially with strict adherence to a spare budget. Often, poor spending habits can lead to massive credit card debt, which is one of the leading reasons people file for bankruptcy. Counselors can help design, implement and stick to these budgets.
• Debt settlements: Most creditors prefer when their clients repay their debts. Instead of having debts wiped out through the bankruptcy process, people can settle with their credit card companies for more realistic payment plans with reduced interest rates. Credit counselors will help with terms.
• Credit card management: Credit counselors can also help consolidate debt into the lowest interest rates available. Financial management can be complex, so a counselor's trained eye can help identify opportunities for reduced monthly payments.

If all else fails, a counselor may recommend filing for bankruptcy. Counselors can offer advice on choosing Chapter 7 or Chapter 13 bankruptcy and help begin the filing process. Many counselors may recommend a local lawyer familiar with bankruptcy.

Seek legal counsel

If a counselor recommends bankruptcy, the next step is hiring a lawyer. An attorney familiar with Maryland's bankruptcy laws can help assemble the necessary documents, work with creditors and build a solution that helps get their clients back on their feet.