Thomas F. Miles, Attorney and Counselor at Law
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Trying to avoid personal bankruptcy? Try these tips

When serious financial strain sets in, many California consumers will do virtually anything to avoid filing bankruptcy. There are a number of misbeliefs surrounding the personal bankruptcy process, and many believe that filing should be the last debt relief option considered. In reality, personal bankruptcy is tool used by many to shed high levels of debt and regain financial stability, and not the financial death blow that some people imagine it to be. However, for those who would like to try to pay down their debt on their own, the following tips are offered.

The first step in any debt relief program involves gaining the proper perspective on one's debt scenario. This means taking the time to pull credit reports and list all outstanding debts. Be sure to contact creditors to get the proper balances, and create a master list of all past and current debts. By mapping out the entirety of one's debt, it is easier to set priorities for repayment.

The next step involves contacting creditors and negotiating for better repayment terms. This can be effective, since many lenders are willing to take a lower amount rather than risking that a borrower files for bankruptcy or never repays the balance. Be upfront about why the account has not been paid off, and ask for more favorable terms. Be sure to get any new agreement in writing before beginning to pay down the debt.

Other tips include looking into loan consolidation and credit counseling. Be careful to avoid any actions that can make the current debt scenario worse, such as continuing to rack up credit card charges or co-signing on another person's loan. By taking these precautions, it is possible to focus all of one's efforts on climbing out of a difficult debt situation.

When setting out on a debt relief path, California consumers should take the time to research all available options. This includes the path of personal bankruptcy. In many cases, the fears and concerns held about bankruptcy are simply false. It is important to understand if this financial tool offers a good fit before making decisions on how to best achieve lasting debt relief.

Source: The Street, "5 Steps to Backing Away From Bankruptcy", Brian O' Connell, April 8, 2014

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Thomas F. Miles, Attorney and Counselor at Law
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