Smith Montgomery & Associates, P.C.

Smith, Montgomery & Associates, P.C., comprised of lawyers and highly-trained staff and one of the leading law firms in Southwest Missouri, is a full service law firm with over 65 years of combined experience.

Many times a bankruptcy can be avoided through assessment of your financial situation, refinancing of current debt and debt negotiation. If you have assets that are not pledged as security for another debt, or if you have significant equity in property over and above the debt currently owed, you can refinance the property to pay off other debt. You can also engage in debt negotiation with your creditors. The best strategy for debt planning is to prepare a comprehensive budget that lists all sources of income and projected future income, and lists all expenses by monthly payment and total balance due.

Many creditors are willing to negotiate the amount they are owed, write-off the balance of the debt owed and allow you to pay the new, lower amount of the debt. Although this can be a viable solution for some, in most instances the creditor wants payment in full of the negotiated balance. For example, if you owe $3,000 on a credit card and the creditor agrees to take $1,000 as full payment, they want the $1,000 paid in one lump sum payment within a very short period of time. BEWARE of debt settlement companies that say they can wipe out your debt for minimal monthly payments. Most of these companies charge exorbitant fees that they take up front before they even begin negotiating with your creditors. This can put you at risk for lawsuits, judgments and garnishments.

Debt consolidation goes hand-in-hand with debt planning. Before consolidating debt, you have to know exactly what your debt is, and only then can you evaluate the best way to proceed with consolidation. Debt consolidation can be accomplished through refinancing current debt or obtaining alternate financing at a lower interest rate. Obtaining a home equity loan to pay off high interest credit cards is one example of debt consolidation. Not only do you get the benefit of lowering your monthly payments overall, you may also get the benefit of deducting the interest on the home equity loan from your income taxes. The key to debt consolidation is to use your credit resources wisely. It will do no good to consolidate your debt if you simply run up the balances on your credit cards again.

Personal debts, also called "consumer debts," can sometimes be negotiated under a process known as debt negotiation. Chapter 13 Bankruptcy can be a good tool for negotiating secured debts such as automobiles or home loans. In many instances, the balance owed on a vehicle can be "crammed down" to the current market value of the vehicle rather than having to pay the full purchase price reflected in the loan amount. This can also be done on other personal property, such as boats, household appliances and furniture, personal computers, etc. In some instances, a second mortgage can also be eliminated under a Chapter 13.

Business debts can be negotiated either directly with the creditors or through a Chapter 11 bankruptcy filing. Most business owners, especially small business owners, are required to sign what is called a "personal guaranty" of the business debts. This means the business owner, or anyone else that has personally guaranteed the debts of the business, will be held liable for the debts they have guaranteed if the business fails to pay those debts. If you are a business owner, you should always carefully review what you sign on behalf of the business. Many individuals have had to file for bankruptcy simply because of the personal guaranties they have signed on behalf of their businesses.

Call the Debt Planning Lawyers at Smith, Montgomery & Associates; we will help you make informed decisions about your options.