Michael J. Logan, Ltd.

Alternatives to bankruptcy in Illinois

In the years following the Great Recession, many people needed to file for bankruptcy. Some estimates report that over 1.5 million people filed for bankruptcy in 2010. By 2011, Illinois had one of the highest bankruptcy rates in the country. 

Bankruptcy is a great option for many people, but it is not for everyone. If you like knowing what all your options are before diving head-first into something, then you should look into alternatives to bankruptcy

Independently create a repayment plan

Whether you have medical or credit card debt, you should always get in touch with your creditors to see if they are willing to restructure your payment plan. During the conversation, you should mention why you have trouble making the current payments. You should also suggest a plan that would work ideally for you. In many situations, creditors open themselves up to negotiation. It may not always work, but it is worth trying initially. 

Engage in a credit counseling service

Occasionally, creditors require debtors to go to a credit counseling service. With this service, you deposit each money into a fund, and the counselor assigned to you will give that money to the creditor. 

Consolidate debt

There are generally two types of debt consolidation. There is the type that requires you to secure equity in your house, and there is the type that does not require that. In the latter's case, a third-party company pays off the debt for you while you set up a more advantageous repayment plan with this new company. In the former's case, you could take out a second mortgage on your home, but you need to be cautious with this course of action. If you are still unable to pay off creditors, then you could end up losing your house. 

If all of these options have risks you are unwilling to accept, then your best bet would be bankruptcy. At the end of the day, you need to do what is right for you to eliminate debt. 

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