WHEN IT COMES TO YOUR DEBTS, YOU HAVE OPTIONS
If you have debts but are not interested in a bankruptcy, there are still other options that you should explore to reduce how much you owe. Although your debts can be negotiated, you usually need to be several months behind before any creditor will consider settling for a reduced amount. You can also negotiate your debts even if you have been served with a lawsuit.
WHAT WOULD A SETTLEMENT LOOK LIKE?
Not all creditors are the same. Some are very open to negotiations, and some refuse to negotiate regardless of how long you have defaulted on the loan. Court fines and fees, for example, are very rarely open to negotiation. Credit card collectors, on the other hand, are usually quite open to a variety of repayment terms, including substantially reducing the total amount due. The amount you could save is usually worth more than any attorney fees you pay to get it done.
STUDENT LOANS AND TAX DEBT: When working within a bureaucratic system such as the IRS or Department of Education, remember that there are always hardship factors that they will consider. Hardship does not always mean unemployment; medical burdens, disability, and other factors can also be considered.
FORECLOSURE DEFENSE: Despite Congress' many shortcomings, it has done a fairly good job of making it possible to keep Americans in their homes despite loss of income, medical issues, divorce, and other life-changing events. If you wish to keep your home but are not ready to file a chapter 7 or 13 bankruptcy, then a home loan modification or government-sponsored refinance program (HARP, OHSI, etc) could be an option for you.