By Robert J. Semrad | Published October 10 2022 |
What Are Alternatives To Bankruptcy in Illinois?
Many people are hesitant to file for bankruptcy because they think that the negatives outweigh the positives. However, this typically isn’t actually the case. Filing can provide significant financial relief that far exceeds any adverse consequences.
If you’re looking for an alternative solution in Illinois, there are other options you can pursue. Just know that for many people, they won’t be as effective and comprehensive as filing for bankruptcy.
What Are the Available Bankruptcy Alternatives in Illinois?
When considering an alternative option to address your debts, make sure you watch out for scams, as they are sadly common in Illinois. While there are some legitimate alternatives to bankruptcy, they are typically short-term fixes at best. They usually can’t comprehensively and permanently eliminate your debt.
We’ve summarized some of the options in the sections below.
If you live in Illinois and you’re struggling to pay your debts, you might consider debt consolidation. This might seem helpful because it allows you to roll all your debts into one loan, potentially with a lower interest rate than you have on your current debts.
However, the monthly payment will be fairly high, since you are rolling everything into one loan. If you don’t have the income to make these payments, you will continue to rack up late payment fees and see balance increases due to the interest, which will start the cycle all over again.
Another Illinois bankruptcy alternative is debt settlement. This can seem like a reasonable option, as there are services in Illinois that offer to negotiate with your creditors to lower your debt. However, these companies often make promises that are too good to be true.
The company will tell you to pay them each month instead of paying off your credit cards. The problem is that the settlement is not guaranteed at this point.
If you choose this alternative and an agreement can’t be reached, you will have paid this Illinois debt settlement company for nothing. Plus, by not making your credit card payments, you will have accrued additional interest and fees, leaving you in a worse position than when you started.
Debt Negotiation and Restructuring
In some circumstances, you can speak with your creditors and they will agree to modify the terms of your loan to make it more affordable for you. Your creditors want to get paid, so if they believe this is the only way you will be able to fulfill your financial obligations, they may be open to negotiating.
However, in our experience, this alternative is not typically viable, as banks rarely agree to restructure loans. And even when they do, changing the terms of one agreement usually doesn’t offer enough relief to solve significant financial problems.
Some people look to asset liquidation as an alternative way to eliminate their debts. This is done by selling assets and paying off your creditors with the profits, sometimes as part of a credit counseling plan. However, unless you have substantial assets, this is unlikely to fix your financial woes.
If you file for Chapter 7 in Illinois, your non-exempt assets will be sold, but you’ll get to keep a significant portion of your property. The money that is made from the sale will be used to pay off your creditors, and the debts that your liquidated assets can’t repay will be discharged.
If Chapter 7 isn’t the right option for you, you can file for Chapter 13. With this alternative, you don’t have to sell anything that you own. Instead, you will set up a payment plan that makes your debt more affordable. Once the repayment plan is completed, the remaining eligible debts will be discharged, and you will be on your way to financial freedom.
Do Nothing/No Action
For some, having too many options can feel paralyzing. But it’s crucial to remember that doing nothing is never the answer, no matter how overwhelmed you feel.
Continuing to make late payments, miss payments, and watch your balances increase because of interest will keep you in this cycle and make it feel impossible to break free. Discussing your situation with an experienced Illinois attorney can make it much easier to choose the right alternative for you and your future.
Why Explore Bankruptcy Alternatives?
Bankruptcy can have a notable impact on your life, as it will affect your credit and can be a barrier to obtaining financing – at least in the short term. Many people choose to search for an alternative out of fear, but their concerns are often misplaced.
Despite the consequences, filing for bankruptcy is often the best option you can choose to get your life back on track and regain financial freedom. A DebtStoppers attorney in Illinois can help you determine which alternative is best for you.
Why Go Through Bankruptcy With an Experienced Attorney?
Filing for bankruptcy can be emotionally taxing. When you have the help of an experienced Illinois lawyer, you can be certain that the process will be handled quickly and efficiently. You don’t need to go through this alone. Contact DebtStoppers today to request your free consultation and get professional help choosing the right alternative for you.