How to Negotiate Out of Bankruptcy
- 1). Draft and deliver a letter to the bankruptcy trustee. In the correspondence, advise the bankruptcy trustee that you intend to negotiate with your creditors in lieu of moving forward with the case. Request that the bankruptcy trustee delay the creditors meeting for 30 to 60 days to allow you time to negotiate with your creditors.
- 2). Review closely all accounts that are part of your bankruptcy case. Realistically evaluate what amounts you believe you can pay off on these accounts. Consider the possibility of a lump sum settlement on these accounts if the creditor discounts or reduces the balance. Also contemplate an extended repayment plan on these accounts as appropriate.
- 3). Write settlement proposals to each of your creditors. Be as specific as possible in your proposals. Keep in mind that you have leverage in negotiating with your creditors, particularly if you filed a Chapter 7 bankruptcy case. Chapter 7 bankruptcy discharges your debt and relieves you of your obligations to your creditors in most cases. Therefore, your creditors are faced with the prospect of getting nothing on their accounts with you if you proceed with your bankruptcy or of getting at least some money through a settlement.
- 4). Draft a settlement agreement for each creditor. If you are able to reach a settlement with the majority of your creditors, providing you much needed financial breathing room, then moving forward with a dismissal of your bankruptcy case makes sense.
- 5). Notify the bankruptcy trustee of your intent to dismiss your bankruptcy case.
- 6). Obtain a standard form motion to dismiss from the clerk of the bankruptcy court.
- 7). Complete and file the motion to dismiss.