For some, debt relief can be obtained without filing bankruptcy. However this does not always work for those who try it. One option is for a debtor to contact the creditors and collection agencies directly to attempt to work out reasonable payment arrangements. Sometimes the original creditors will agree with this, provided you maintain whatever payments have been agreed upon. However once a debt has been assigned to a collection agency, this is much less likely. Based on what debtors have told me over the years, collection agency representatives are only interested in getting as much money from you as quickly as possible, so they rarely agree to any monthly payments that are affordable. Further, with interest still accruing, it may take many years to pay off the debts this way.
You could contact a company that specializes in debt assistance, but you must be very cautious. Some companies tell you to stop paying your creditors altogether, and instead send a monthly payment directly to them. When they have accumulated sufficient funds from you, they will negotiate lump sum payments with your creditors one at a time. However, with many of these companies, your first six or more monthly payments will go toward their fees. Only after then will any moneys become available for negotiating with creditors. By then, with your creditors no longer receiving payments, they will be contacting you more aggressively. Some may even sue you because of the lack of payment received. I have had many bankruptcy clients attempt this first in an attempt to avoid filing, but the collection activities and lawsuits become too much for them.
Another type of agency is one that will immediately negotiate with the creditors to lower your monthly payments. However the only one of these I recommend is Consumer Credit Counseling Service, www.cccservices.com. It is a national non-profit, but does have several offices in the Cincinnati/Northern Kentucky area. It may work if your debt level is relatively low. However, if you have large debts, it may take many years to pay off the debts under this type of plan.
Another option is available for those whose only income is from social security, social security disability (SSD), or supplemental security income (SSI), and who do not own real estate. Federal law bars creditors from being able to seize or garnish this type of income, so those receiving only this type of income are deemed “collection proof”. The option in this situation is to do nothing, since your income cannot be garnished. There are some drawbacks to this. For one thing, you may still receive collection phone calls and letters. Also, if they have a judgment they can garnish money from a bank account. You are entitled to receive it bank by showing the Court the balance is from social security income, but you will then be without those funds in the meantime.
