Alternatives to Mississippi Bankruptcy

In general, it is a good idea that the consumer evaluates all of her options before deciding to file for bankruptcy. Before the consumer file her case, think about the types of debt she have and the goals she want to achieve by filing for bankruptcy. A bankruptcy discharge doesn’t eliminate 
certain types of debt defined as priority debt. This means that filing for bankruptcy may not be in the consumer’s best interest if all she wants to do is wipe out debts that can’t be discharged in bankruptcy.

In addition, many creditors are willing to work with debtors using alternatives to Mississippi bankruptcy to settle their debts. If a consumer can afford to resolve her debts outside of bankruptcy, she may not need to file for bankruptcy.
Listed are four alternatives to Mississippi Bankruptcy: 

1. Do Nothing 
2. Create a Budget 
3. Credit Counseling 
4. Debt Negotiation 

Consumers can make a choice to do nothing, they can continue to attempt to pay their monthly bills or the minimum payments, or they may not pay their debts at all. Either way, the debts generally won’t go away. Their debts will usually become delinquent and the matters may 
escalate into legal action against the consumer. 

Pros – 
1. If a consumer owes a lot of debt and they have very limited, if no income or assets to speak of their chances of being sued may be very limited, especially on unsecured debts with a balance less than $1,000. Creditors will usually attempt to collect on a debt for a period of 6 months 
before placing an account with an outside collection entity. A consumer may be able to work out a better arrangement with the outside agency than what the original creditor would offer them. 

Cons – 
1. Consumer Creditors will review their situation and if they feel the consumer has assets, money, or a stable job, they may risk their creditors taking legal action against them, in which the creditors may be able to obtain a wage garnishment, a lien against personal property, bank 
levy, or even seize their property. 
2. The Consumer’s credit rating may be severely affected. Any future loans or financing they are 
able to obtain may carry a higher interest rate 

Creating a budget may help some consumers to better maintain their debts on a monthly basis. They may have to give up certain luxuries, refinance loans, and live more frugally so they can pay down their debt. 

Pros – 
1. A consumer can get out of debt without bankruptcy, credit counseling or debt negotiation; 
2. If they are current on their debts, the consumer’s credit may not be affected; in fact it may even be improved. 

Cons – 
1. Creating a budget requires a strong will. The consumer may have to change their lifestyle and reduce some of their weekly and monthly expenses in order to have more money to pay off their debts. 

Today there are thousands of Credit Counseling services. The idea is to resolve consumer’s debt problems by lowering the interest rates on their credit cards. 

1. Traditional counseling services offer free, competent budgeting advice and charge only a small monthly administration fee; 
2. Some companies can instantly arrange for a consumer to have lower monthly payments and interest rates through their pre-established relationships with major creditors; 
3. If the consumer has significant credit card debt, they may be able to get the consumer’s monthly payments reduced. 

1. Dropout rate is high -- estimates range from 50% to 75%. Only about 20% of those who sign up complete the program and a high percentage of those who drop-out go on to file bankruptcy; 
2. Many people's bills actually increase each month rather than decrease -- if a consumer can't afford a 3% increase in your monthly payments now, than credit counseling probably won't work for them; 
3. It may take more time to pay off their debt than what a credit counselor may advise them of. In fact, in many cases the time schedule to pay off debt is often grossly underestimated. Many consumers find out after a year of using a service their debt hasn't reduced at all and it will take 
them at least 12 years to pay off the debt if they stick to the credit counseling plan; 
4. Some Creditors will increase a consumer’s interest rate they are paying! Not all creditors participate in credit counseling programs and will actually increase the interest rate on a consumer’s card. 
5. New age counseling services charge high fees, offer low quality money management advice; often don't pay your creditors on time (which results in added late fees and more negative marks on credit reports); and too many of them pocket a consumer’s money instead of paying their 
creditors. This results in late fees, and possibly more negative marks on their credit report and renewed collection efforts; 
6. A consumer’s credit rating will be damaged by notations they have entered a debt management program. These notations can stay on their credit report for seven years. They may not be able to get credit for the next 2 or 3 years and the credit they do obtain will be at a high 
interest rate. 

Recommendation: This should be the last alternative to Mississippi bankruptcy that a consumer should use. The damage to an individual’s current credit as well as future credit may have long term affects.

A consumer can negotiate alternate repayment plans and reduced settlements with unsecured creditors and collection entities. If they are successful, they may be able to settle their unsecured debts for substantially less than what they owe and get out of debt a lot faster than with most of the other options mentioned, while possibly preventing their various creditors from taking legal action against them. 

Pros – 
1. Can get out of paying thousands of dollars in debt; 
2. By quickly negotiating alternative payments or settlements of one’s debts they may be able to avoid judgments and wage garnishments; 
3. Can avoid filing bankruptcy. 
4. May be able to improve their credit by being able to take care of their debts for less; 

Cons – 
1. Some negotiations may have an adverse effect on their credit if the accounts they are negotiating have not been recently reported. 
2. If a consumer is not prepared in dealing negotiating their debts, they may say or do the wrong thing; that may worsen their situation. 
3. Might have to pay tax on forgiven debt. 

Recommendation: This may be a consumer’s best alternative to Mississippi bankruptcy and credit counseling and can potentially get them out of debt the quickest while saving them the most money possible.

Contact Tucker Legal Clinic NOW for a FREE consultation or call 228-215-3584.