Consumer Credit Counseling

Southern California Consumer Credit Lawyers & Bankruptcy Counseling Attorneys
Credit Counseling Compared To Filing Bankruptcy.

Many of our clients are concerned that filing bankruptcy will ruin their credit. In fact, failure to pay one's creditors is what damages credit by lowering one's credit score. At the Law Offices Of Hagen & Hagen, we advise our clients with respect to all available alternatives to bankruptcy.

There are alternatives to bankruptcy, some more attractive than others:

1. Do nothing. Without filing bankruptcy, creditors are free to take all legal actions necessary to collect their debts. Some creditors will take no action at all. Some creditors will sue and obtain judgments, to be followed by earnings withholding orders (wage garnishments), bank account levies, and the recording of abstracts of judgment which are liens against all real estate owned by the debtor within the county in which the abstract was recorded.
    
2. Debt consolidation. There are numerous debt consolidation agencies. Consolidators attempt to get creditors to reduce interest rates, reduce monthly payments, and in some cases, reduce principal. If the debtor is experiencing a temporary cash flow shortage, consolidation may be productive. Debt consolidation programs are also notoriously fragile, with all protection evaporating if even one payment is late or missed. For most debtors, consolidation will only provide moderate short-term relief, and is therefore an inadequate long-term solution.
    
3. Debt negotiation. There are numerous debt negotiation agencies. Negotiators will ask the debtor to deposit with them a sum equal to fifty to sixty percent of their debt. The negotiator will then seek from creditors an agreement to accept less than that amount. Any savings realized will belong to the negotiator as its fee. It's a win-win-win scenario. The debtor is happy because he solved his debt problems by paying only fifty to sixty percent of his debt. The creditors are happy because they were paid in part on their claims. And the negotiator is happy because it was paid for its services. But not many debtors are in a position to pay fifty to sixty percent of their debt in cash. Most debtors with such cash resources would not perceive the presence of a cash flow shortage. Negotiation makes sense only for debtors with existing unsecured debt problems, usually in the form of credit cards, who anticipate a large cash infusion, such as a large inheritance, a work bonus, or tax refund.
    
4. Settle only with problem creditors. One possible alternative to bankruptcy is to douse only the hottest fire. In other words, don't pay creditors until they sue, and then settle with such creditors one at a time. For this plan to work, only a small percentage of the creditors ultimately file suit.

At the Law Offices Of Hagen & Hagen, we will help you consider the alternatives to filing bankruptcy and can refer you to a credit counseling program or debt negotiation program if such a program is your best option. Please contact our bankruptcy law firm for more information.

Our Southern California consumer credit lawyers represent clients throughout Southern California, including Los Angeles County, Orange County, Riverside County, San Bernardino County, Santa Barbara County, Ventura County and San Luis Obispo County. Our Los Angeles bankruptcy counseling attorneys see clients from all over the greater Los Angeles area, including Santa Monica, Long Beach, Anaheim, Pasadena, Orange, Huntington Beach, Newport Beach, Garden Grove, Irvine, Yorba Linda, Riverside, San Bernardino, Pomona, Torrance, Simi Valley, Mission Viejo, Ontario, Glendora, and Covina. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.