Owing to a series of circumstances, you are no longer in a position to honor your debt obligations. It isn’t a lack of desire to pay those debts; you simply don’t have the means to do it any longer. Instead of dodging your creditors or assuming that filing for a personal bankruptcy is your only option, it pays to work with your creditors first. If they don’t work, then it’s time to think about scheduling a free consultation with a bankruptcy lawyer in Scottsdale, Arizona.

Inquiring About Extended Grace Periods

Being honest with creditors is your best bet. That means contacting them before they start wondering where the current payment happens to be. During that initial contact, ask specifically if the creditor offers any type of extended grace period for making past-due payments. Your goal is to find out if there’s some sort of basic plan that would allow you more time to make the typical payments a little later. While this is a long shot, some creditors do have these types of plans. If so, it could buy you the time it takes to get back on track with the payments.

Negotiating an Alternative Repayment Plan

Some creditors are open to setting up alternative plans that allow you to pay what you can each month. You’re likely to lose any charging privileges once you enter into the plan, and there may be other finance charges or penalties that apply. While this isn’t ideal, it may work if the reason for your loss of income is temporary. At the least, you avoid having anything turned over to a collection agency. As attorney Casey Kepple will point out, some creditors are willing to do this rather than face the prospect of getting nothing if you file for bankruptcy.

Asking About Options for Debt Settlement

While the creditor may not be open to any type of alternative monthly payments, debt settlement may be an option. In this scenario, the creditor would offer to settle your account balance for less than the current amount. You in turn agree to pay the reduced amount within a specified period of time. The remaining balance is written off as bad debt.

This is another option that some creditors will consider in order to avoid getting nothing from a bankruptcy action. While the account will be closed, it at least reduces your debt and makes it easier to deal with whatever other obligations still exist.

Consider Working Through a Debt Counseling Agency

The Kepple Law Group does recommend speaking with a professional at a debt counseling agency. Agencies of this type can help clients set up budgets and seek to come to some sort of payment arrangements with creditors. In the best-case scenario, all the creditors agree to accept the payments through the agency and you eventually pay off all of your debt.

Keep in mind that the creditors are under no obligation to accept the plans presented by debt counseling agencies. If a creditor rejects the proposal, the balance owed is still subject to collection actions. That’s true even if the agency remits partial payments on your behalf.

Continue to Remit Payments Even as the Negotiations Continue

If at all possible, continue to remit payments to your creditors each month. Even if the payment does not equal the minimum due, send them in anyway. Doing so demonstrates good faith on your part, something that may help with the negotiations.

Filing for bankruptcy should never be your first choice. Try everything that you can imagine to work with your creditors first. If it turns out that they cannot work with you for any reason, that’s the time to call a personal bankruptcy lawyer in Central Arizona and schedule a free 30-minute consultation. With the aid of the lawyer, you’ll find out if you qualify for bankruptcy protection, which form of bankruptcy would work best in your case, and how long the process will take before you’re out of debt.