There are three ways you can go about resolving your debt crisis without filing bankruptcy.
- Do nothing. Yes, you heard me right. Ignore the lawsuits and collections calls and let them come after you. This strategy is not for everyone, and comes with a certain amount of risk. I had a client who was judgement-proof by virtue of only receiving disability or Social Security income, which by law cannot be garnished or levied upon. He told me that he was not going to file bankruptcy until the bank came after his house in foreclosure. So, the various lawsuits that were filed against him by creditors (and there were several) went unanswered. He had no assets that could be seized save his house, and all the creditors could do was place a lien upon the property, which would only be resolved once a sheriff's sale took place. This is an exceptional circumstance, and likely most people considering bankruptcy would be well-suited NOT to go this route.
- Try and negotiate a settlement of your debt. This works well if a lawsuit has already been filed -- you can try to broker a deal with the creditor either in court or outside of court to allow you to make monthly payments towards the balance (or a lump sum towards a reduced balance) and get them off your back. But I have said previously that taking a settlement proposal exposes you to tax issues come April 15 of the next year. If you only have a few outstanding debts, this is a relatively easy process. If you have many debts, it is not so easy.
- Fight the creditors and make them prove their case against you. This comes with a risk. An experienced debtor's attorney can help you determine the best course of action on your day in court. However, if the case is tried and the creditor wins, you will be obligated to pay the amount awarded by the court.
When trying to determine the route you need to take, an experienced attorney is an important tool to have at your disposal. While you can certainly attempt to go it alone, make sure you are fully informed of your rights and options before you make any decision.