Alternatives To Claiming Bankruptcy May Not Work For You

Due to ongoing misconceptions about bankruptcy, it is often seen as a last resort or something to be avoided at all costs. At Bryan P. Keenan & Associates, P.C., our attorney and debt relief staff understand the social stigma attached to bankruptcy and work to help clients understand all available options before suggesting the best course of action.

Debt Consolidation And Credit Counseling

For those struggling to pay back debts, there are several repayment alternatives to filing bankruptcy. The three most common are:

  • Debt consolidation: Through debt consolidation, all your financial obligations are combined into one loan. You only pay one monthly payment, which is often less than the combined total of the individual bills.
  • Credit counseling: With credit counseling, a credit counselor reorganizes your finances by creating a financial plan to help you manage your debts and pay them back outside of bankruptcy court.
  • Additional loans: To pay off debt and avoid bankruptcy, indebted borrowers may take out a home equity loan or second mortgage or borrow against a retirement plan.

Although credit counseling and debt consolidation advertisements promise effective results, they may not be a viable option even if you can afford the monthly payments. Furthermore, just because you can obtain another loan to pay off debts, it may not be the best solution to your financial problems.

Transferring Assets

Transferring assets into another's name before filing bankruptcy does not protect the assets from creditors or bankruptcy trustees. What's worse, attempting to hide assets by transferring them may lead to the denial of your discharge and, therefore, you will not achieve your fresh financial start.

A bankruptcy trustee can recover assets transferred within one year of the bankruptcy filing when the debtor did not get reasonably equivalent value for the asset or when the transfer was made with intent to hinder creditors. The "look-back" period is even longer under Pennsylvania law, giving the trustee more time to recover assets.

If you have more assets than you can protect with the available exemptions, consider filing Chapter 13. Through a Chapter 13 bankruptcy, the debtor generally keeps all his or her property and "buys back" the nonexempt value from the creditors through payments to the Chapter 13 trustee out of future income.

Evaluate Your Options With A Free Consultation

During an initial consultation, we help clients evaluate their financial options, including nonbankruptcy debt relief options. Schedule your free consultation with a lawyer by calling 412-923-4941 or send us an email.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.