Filing for Chapter 7 Relief is not a Quick Fix Says Des Moines Bankruptcy Lawyer

Filing for Chapter 7 does take time. It should never be viewed as an easy way out of debt.

Des Moines bankruptcy lawyer Kevin Ahrenholz indicates that many debtors feel they are in a hopeless situation and have nowhere to turn. They think filing Chapter 7 bankruptcy is the answer to all their problems. However, filing Chapter 7 may create a problem for them that they need to consider before filing.

Declaring bankruptcy remains on a debtor’s credit report for ten years. This means their credit score, often referred to as a FICO score may drop by as much as 200 points. FICO stands for Fair, Isaac and Company, one of the first credit score companies, founded in 1956. A drop such as that may mean getting a loan or other forms of credit will be difficult, and in some instances, impossible. If there are other alternatives at a debtor’s disposal, it may be worth trying those first.

Ahrenholz discusses a variety of alternatives debtors may wish to try before filing for bankruptcy. One of them is creating a budget. Often a debtor finds a detailed budget focuses on unnecessary expenses. The time involved in tracking all expenses, no matter how small they may seem for at least two months, will give the debtor an idea of where they can cut back.

An in-depth analysis of the results of tracking expenses will clearly show if more money is being spent than made, thus alerting the debtor to areas they may eliminate or reduce spending. Also try to find additional ways to increase the monthly paycheck, and this may assist the debtor to get his debts under control, or at the very least, manageable. While the budget may be on paper, the changes made often translate well into real life spending.

Another strategy that Ahrenholz says his clients may attempt is negotiating with lenders. This is very effective for those who are facing a temporary setback, and have always paid their bills on time. If an individual has a good payment record, many creditors, once they understand the nature of the problem, will lower monthly payments or extend the payment time. It is worth trying, and may make a difference to an individual’s overall financial picture.

Debt consolidation helps a debtor avoid bankruptcy. However, this should be taken under careful consideration, as when this happens, all loans and credit card bills are combined into one debt. Often when this is done, the creditor wants the debtor to use their house or other assets as collateral. If the ultimate decision is to file bankruptcy later, debt consolidation may put a debtor’s ability to keep their house in question.

Bankruptcy, and whether or not to file, is something that should be discussed with an Des Moines bankruptcy attorney. Part of that conversation may include other bankruptcy alternatives if that is what the debtor wishes to pursue first.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit https://www.iowachapter7.com or call 1.877.888.1766.