Alternatives to Bankruptcy in Dallas

The word “bankruptcy” is enough to trigger anxiety and fear in some people. While bankruptcy is a necessary option for many debtors, there may be alternatives available to you. If you’ve fallen behind on your debt and you’re not sure what to do next, it pays to consult an experienced bankruptcy attorney.

At Toronjo & Prosser Law, we understand that bankruptcy is probably the last thing you want to do. We can review your debt and let you know whether bankruptcy or other alternatives best fit your situation.

What Are Some Alternatives to Bankruptcy?

Debt Consolidation

This is a great alternative for debtors who have several different creditors and high-interest rates. Debt consolidation allows you to combine your debt so you have one payment instead of many. This makes it easier to deal with the debt, instead of having multiple interest rates, payment amounts, and due dates. In a typical debt consolidation, the accounts are merged into one with a relatively low-interest rate. Credit card companies sometimes offer low or no interest rate consolidation options. However, it’s important to make all payments on time so you don’t rack up late fees.

Debt Negotiation

You may be able to negotiate various terms with your creditor, such as lowering the interest rate, extending the number of payments due under the plan, or even reducing the total balance due. Some debts cannot be negotiated, however. These include student loans and child support payments. But other debts such as medical bills, credit cards, and vehicle loans may be eligible for debt negotiation. You should make sure that any terms agreed upon between you and the creditor are in writing.

Debt Settlement

Similarly, debt settlement offers the ability to negotiate and settle your account with a payment that’s less than the total amount due. This is almost always done by way of a lump sum settlement, so it’s essential to save up a significant amount of money before considering this option. If done correctly, the account can be paid off for less than what is owed and then closed. As with debt negotiation, make sure you get written confirmation of any settlement terms if you intend to make a lump sum payment.

Help For Homeowners

If you’re a homeowner, chances are your mortgage is the most significant monthly payment you have. You may be able to negotiate a loan modification with your lender. Your mortgage company has a loss mitigation department that can assist you in modifying the loan and potentially saving your home from foreclosure. Contrary to popular belief, lenders typically dislike having to foreclose because of the cost involved and the likelihood of receiving less than the value of the home. This makes loan modification a mutually beneficial possibility.

Home Short Sale

Another option for homeowners is the short sale, which happens when the home is sold for less than the balance still owed on the mortgage. Although a short sale will impact your credit, it is generally less damaging than a foreclosure. Short sales must be worked out with the lender, and you may owe any deficit after the sale. So be sure to learn what terms and conditions may be attached.

Selling Assets

Many debtors don’t have enough money to keep up with their debt payments, but they have several assets they don’t need. These may include anything from substantial assets like real property or vehicles to smaller items like electronics and household appliances. Selling these assets can bring in extra money that can be used to stay on top of your monthly payments or even to make a lump sum offer to your creditor.

Lifestyle Changes

Not all debtors lack the money they need to pay their debts; they’re simply spending that money on the wrong things. Eating out, taking vacations you can’t afford, or buying the newest gadgets can quickly consume all of your disposable income. Take a look at your monthly spending habits and figure out where you can afford to cut back. Make a budget, prioritize the expenses you have to pay (such as mortgage, rent, and utilities), and stick to it. Some debtors are shocked to find out how much they are wasting, and pleasantly surprised to learn they can put their money to better use like eliminating debt.


Your creditor may claim you owe a debt that you don’t, and might refuse to correct it. Meanwhile, some debtors who end up being sued by their creditors find out that their rights under the Fair Debt Collection Practices Act were violated. Situations like these open the door to litigation as a possible solution. If you suspect that you don’t owe a debt, that you don’t owe the full amount demanded, or that your creditor has somehow violated your rights, talk with a lawyer.

An Experienced Bankruptcy Attorney Can Help 

These are only a few of the alternatives to bankruptcy, and you may have others depending on your specific circumstances. Regardless of how much debt you have, you should fully evaluate all of your options, including bankruptcy. Let Toronjo & Prosser Law help. We can review your case and get you started on the path to becoming debt free. Give us a call today.