Filing for bankruptcy is often a prudent path to take for Tennessee residents who are struggling to make ends meet, but it is not the only way to escape unmanageable debt. It sometimes makes more sense to avoid the consequences of a bankruptcy by negotiating directly with lenders to reduce balances or arrange more flexible repayment terms. However, this kind of work may be best left to attorneys with experience in this area who have a strict ethical obligation to pursue the best possible outcome for their clients.
If you are struggling to make even minimum monthly payments on your credit cards or other bills, you may wonder why your creditors would consider reducing the amount you owe or lowering your interest rate. While this could seem counterintuitive, there are a number of reasons why lenders would consider making just this type of concession.
Creditors often receive nothing when consumers file Chapter 7 bankruptcies, and the amount they receive under Chapter 13 payment plans may not be enough to cover the debt in question. However, experts advise consumers to tread carefully when comparing debt settlement services and avoid companies that encourage their clients to stop making payments altogether in order to prompt lenders to enter into negotiations. This is a reckless approach that offers no guarantee of success and can seriously damage credit scores.
Attorneys who offer these services enter into fiduciary relationships with their clients, which means that they must always act with their best interests in mind. Attorneys will generally look the overall financial situation before determining whether pursuing a personal bankruptcy or seeking a negotiated settlement would be the wisest course of action. If you are confused by the myths and misconceptions surrounding bankruptcy and would like to know more about your options, you are invited to visit our debt relief page for more information.
