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When it comes to getting rid of a huge amount of debt, there are formal and legal options available like bankruptcy as well as informal options like loan workouts. Though bankruptcy is probably one of the best ways of getting rid of debt, lawyers of Dallas based bankruptcy law firm Recovery Law Group inform that the repercussions are something that people are often not prepared to adjust to.
Individual consumers can file for bankruptcy under Chapter 7 or Chapter 13. Through these bankruptcy chapters, debtors repay some portion of their debt while getting rid of others at the end of the chosen bankruptcy chapter. Though getting a discharge of your unsecured debts is a great option, bankruptcy has a negative effect on your credit history. Many consumers are not willing to risk the appearance of bankruptcy on their credit report and therefore look for alternatives to get rid of their debt. One such option available is “loan workout”
This informal debt paying technique is offered by many creditors. In this case, the debtor and the creditor come to agree on an informal payment plan through which the debtor pays a reduced amount of money than they owe. This way, without the negative effect of bankruptcy, they can get rid of their debts. However, there are downsides to this plan too. These include:
- The casual approach of the debtor regarding the payment of debts.
- Verbal agreement with the creditor regarding lower repayment amount or payment plan, which may later prove to be extremely costly if the creditor denies any such agreement.
- Letting the creditor access to your accounts. You might end up losing everything if they decide to directly take the money from your account.
These mistakes can leave you with no legal option to pursue against the creditors. if you wish to protect yourself from dubious practices, you should call 888-297-6023 to consult with experienced bankruptcy lawyers Dallas regarding your case.