(800) 206-6122

Attorney Bankruptcy Services

Non-Bankruptcy Options

If you wish to avoid filing for bankruptcy, or you do not qualify for a Chapter 7 bankruptcy, Attorney Bankruptcy Services can help you with several effective non-bankruptcy alternatives to solve your debt problems.

The three primary non-bankruptcy options you have are these:

1. Debt Settlement
Debt settlement in Washington means you can settle your credit account debt at a discount by utilizing cash to pay your credit obligations in full. This is reffered to as "debt settlement". Debt settlement in this way may be accomplished by borrowing money from the equity in your home, from family, friends or third-party lenders. Attorney Bankruptcy Services has long-time experience in working with clients to achieve debt settlement in the right way. See more information on debt settlement below.

2. Debt Consolidation
A service offered by either for-profit or non-profit organizations, debt consolidation works with your creditors to lower your interest rates and help establish a repayment budget. (These debt consolidation programs may be called "credit counseling" or "debt management plans" or "debt adjusting plans" depending on the agency or company involved.) We know how to help you with debt consolidation, and provide you with more information about this service below.

3. Debt Repayment in Chapter 13 Bankruptcy
A debt repayment in Chapter 13 bankruptcy allows you to repay all or a portion of your debt based on your income, expenses and assets. Depending on your income, a Chapter 13 debt repayment plan can repay most, non-fraud related consumer debt over 3 to 5 years. If you are considering debt repayment in Chapter 13 Bankruptcy please contact us. More information on debt repayment is below.

Click on links above, or read below for more information about non-bankruptcy alternatives to debt problems.


A debt settlement, or offer and compromise, involves the negotiation with your creditors by Attorney Bankruptcy Services to achieve discounted settlements on your credit accounts.

An offer is made to your creditors of a discounted cash sum to settle your credit account in full. Depending on the creditor, accounts are typically settled between 25-75% of the principal amount owed by you.

In this type of debt settlement, the key component in an offer and compromise case is cash. You must offer a cash sum to the credit card companies and/or other creditors to reach a discounted debt settlement. With cash, you gain substantial leverage in negotiating with your creditors.

The source of the funds to pay creditors in an offer and compromise, debt settlement case, can be from cash savings or borrowing. Borrowing money from friends, family or third-party lenders may provide you with substantial savings on the principal and interest due and owing to your creditors.

Furthermore, if you own equity in a home or other real property you may utilize the equity to borrow the cash sums to fund an offer and compromise case. Not only is the interest in an equity loan far less than consumer credit, but also the discounts you may receive on your credit accounts can amount to substantial financial savings to you.

However, there can be problems with this type of debt settlement. Many people find that they end up in worse shape by using their house as a "piggy bank".

The economic reality of a refinance is that people trade an unsecured debt for a secured debt.

If you default on a credit card balance, the creditor (if you ignore the problem long enough) can sue you and obtain a court judgment. Then they can put a lien against your house, so that if you ever sell the house, you’re forced to hand over the money. But a consumer creditor usually will not force the sale of your house, as it is quite expensive to do so.

A secured debt is a far more serious matter, because you’ve pledged your house as collateral. If you default on a debt that has been secured by your house, then you risk losing that home. This can be another factor to consider in debt settlement.

Why trade unsecured debts for secured debts?

For some people with little to no equity, a refinance may not be your most financially sound option.

Debt settlement is one form of debt elimination that can work effectively, if done properly and with resolve.

To find out if debt settlement is the proper solution for your situation, give us a call or contact us now to set up a free consultation. We would be glad to help.


Debt Consolidation might be more accurately referred to as "debt management plans", or "debt adjusting plans". "Debt consolidation" is not really consolidation at all in the true sense of the word, as described above.

Instead, you are enrolled into a debt repayment program.

With this type of debt consolidation you meet with a counselor who analyzes your monthly budget. The counselor then makes contact with your creditors (although all creditors may not agree to payments) and attempts to get them to lower the interest rate. You make one monthly payment to the agency, which then disburses the funds to your various creditors.

The theory here is that your overall payment per month is lower due to the counselor’s success at obtaining lower interest rates and more favorable terms with the credit card banks. This is essentially what we mean by debt consolidation.

This type of debt consolidation is the one most often recommended by the banks themselves, and in the financial press these debt consolidation repayment plans (through "non-profit" agencies) are touted as the cure-all for debtors who are in over their heads.

So, does debt consolidation really work?

Well, maybe yes, more likely no, depending on your situation.

More than half of all who enroll in such debt consolidation, debt management programs drop out before finishing the plan.

First, you have to understand that these agencies actually receive most of their compensation from the bank you owe the money to. So, whose side are they really on - the side of the consumer who's paying a monthly $20 administrative fee, or the bank that’s paying 8% to 15% of the restructured debt in the form of a kickback?

Second, these agencies say that they can have your interest rates lowered, and they may or may not be able to do so, as there is no requirement that a creditor agree to a debt consolidation plan. In fact, many industry critics view such agencies as debt collection companies in disguise.

Third, most counselors are not going to work all that hard at getting an uncooperative bank to cooperate. The net result is that they simply enter into a typical hardship program that you could have easily obtained for yourself without the extra fees.

Finally, with a debt management or debt repayment program, the most frequent complaint we've heard from ex-participants is that they have little or no insight into what the agency is actually doing on their behalf, and they have virtually no control over the process.

They send in their single monthly payment, with no idea of how much is going to which creditor, and since most counselors are busy people who work based on high volume, getting a return phone call can be difficult.

An example at our firm: A client retained a consumer credit counseling agency to resolve about $25,000 in credit card debt. After enrolling in the consumer credit counseling program and paying over $700.00 per month for 5 years ($42,000.00), our client’s credit card debt remained at $25,000.00 5 years later.

Like any business, there are good and bad debt consolidation services out there.

However, debt consolidation may not really SOLVE the problem at all.

In other words, if you walk into the office of a debt consolidator owing $25,000, you may still owe $25,000 when you walk out.

To find out the best solution for your particular concerns and situation, it is best to contact us now and set up a free consultation. We can look at the facts of your case and point you in the right direction. If the solution is debt consolidation, we can give you experienced, understanding help.


The final form of "debt consolidation" is actually not consolidation at all, but rather a form of bankruptcy called "Chapter 13."

A Chapter 13 bankruptcy consolidates all or most debt into one payment to be made to the Bankruptcy trustee, who distributes such payments to your creditors. This is sometimes referred to as debt repayment.

A Chapter 13 also stops most interest and penalties. While in a Chapter 13, creditors are prohibited from contacting you or taking any collection efforts against you. To find out more about Chapter 13 bankruptcy, click here.

Just contact us today to set up your free consultation and we can see how we can help you eliminate your debt problems, either through Chapter 13 debt repayment, or in some other way.

At Attorney Bankruptcy Services we can help you with all types of bankruptcy, or NON-bankruptcy options.

To receive a free consultation regarding your (or your friend or family member’s) debt problems, please contact us today at (206) 442-9500.

Go to Top