CAN I SETTLE MY BANKRUPTCY OUT OF COURT?
Posted on 09 26,2014
Bankruptcy can be a time consuming, stressful, and even overwhelming experience for an individual without the right legal team. The process can be very complex, making bankruptcy alternatives more and more appealing to debtors. But what are these alternatives and are they as effect, safe, or affordable as the traditional method?
One of the options available to consumers seeking financial relief without the label of bankruptcy is an out of court settlement. This is a privately conducted negotiation that takes place between the debtor and each of their creditors. The settlement is governed by contract law, which provides structure for the process.
THREE TYPES OF OUT OF COURT SETTLEMENTS
While an out of court settlement is pretty straightforward, it is not the best option for every consumer. It is important to consider each financial factor in your situation and compare the possible outcomes. With that being said, there is more than one option when it comes to out of court settlements.
The main types of settlements include the following:
- Extension and composition plans
- Court appointed receiverships
- Assignment for benefit of creditors
Each of these out of court settlements offer different benefits and should be reviewed carefully with your attorney.
IF AN OUT OF COURT SETTLEMENT THE BEST OPTION OR ME?
Before determining which type of out of court settlement is best for your situation, you will need to decide whether or not this option is right for you in the first place. While many debtors seek to pursue a settlement right away, it may be in their best interests to consider all the factors first.
You will likely have the most success with an out of court settlement if there are only a few creditors involved. When there is a creditor committee overseeing the disposition of the property and the distribution of any proceeds, it can greatly help the chance of obtaining an effective settlement. A settlement may also be effective when you have a decent amount of economic impact in the community and it would be beneficial for numerous parties for you to regain this footing.
Prior to proceeding with an out of court settlement, you will want to ensure that it is the correct option and that you have the right legal team behind you. Want to learn more? Call our Virginia Beach bankruptcy lawyer to get counsel.