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Winter Law Group March 2, 2021

In the 12 months prior to March 1, 2020, California ranked first in the country for the number of individuals filing Chapter 7 bankruptcy (nearly 35,000) and ranked second for individuals filing Chapter 13 (nearly 12,000). That was before the COVID-19 pandemic shattered the economy.

Even if people kept their jobs, opportunities for raises and advancement stagnated. Some people maxed out their credit cards, cashed in retirement accounts and investments, and drained savings accounts trying to stay afloat. If you are among those people struggling, you do have options to gain better financial stability.

At the Winter Law Group, we represent clients in Fresno, California, facing severe financial challenges explore their options. Here are three tips on how you can gain a more solid financial footing:


Bankruptcy is the legal process through which someone whose debt far exceeds their ability to pay it can have their debt discharged or reorganized to give them a fresh financial start. Chapter 7 bankruptcy discharges most types of debt. Chapter 13 bankruptcy reorganizes debt so it can be paid off manageably over three to five years.

Some of the pros of filing for bankruptcy include getting an automatic stay that prohibits your creditors from contacting you and delaying foreclosure on your home or repossession of other secured property. Perhaps the biggest advantage is that it allows you to stop paying money for interest and fees that can instead be put into savings or retirement for your future.

The major disadvantage to bankruptcy is the damage it does to your credit rating for a period of time. Chapter 7 bankruptcy remains on your credit report for 10 years. If you continue to abide by the repayment schedule in Chapter 13 bankruptcy, it remains on your report for up to seven years.

There are, however, ways to begin rebuilding your credit almost immediately after bankruptcy, and it may not prevent you from, for example, buying a home before the bankruptcy is removed from your credit report.

Creditor Negotiation

With creditor negotiation, a third party negotiates a repayment plan or a reduced debt amount, which you pay to the creditor in a lump sum.

While negotiating with creditors could help you lower the amount you owe, avoid bankruptcy, and keep creditors at bay while you negotiate a settlement, there are also risks involved. Creditors may not agree to negotiate or never come to an agreement, and if you stopped paying them while negotiations were occurring, you could end up owing more in interest and penalties. The third-party debt settlement company will charge you fees even if they fail to settle your debt for a reduced sum. As with bankruptcy, payments not made while negotiating a settlement could be reported and damage your credit score.

Debt Consolidation

Debt consolidation is combining two or more debts and paying them off with a single loan. Instead of making three payments to three creditors, for example, you make one lower monthly payment on the debt consolidation loan.

Some pros of debt consolidation include simplifying the number of payments you make and, if your consolidation loan charges less interest than the original debts, you save interest over time.

Cons include needing access to a debt consolidation loan, which typically requires a good credit score. You may incur fees for loan origination and closing, balance transfers, or annual fees. It can also cause a dip in your credit score because getting a consolidation loan initiates credit inquiries.

The Winter Law Group is Ready to Help You

Unmanageable debt can be stressful and overwhelming. You may not be able to ever get out from under your crushing debt without using bankruptcy, creditor negotiation, or debt consolidation to find some room to breathe. No matter which route you choose to pursue, the most important step you can take is to develop new, healthy financial practices to help you rise out of debt and not return to poor spending habits.

For more than a decade, our team at the Winter Law Group has been helping clients find a fresh financial start. We put our experience and knowledge to work for each of our clients and their unique situation, guiding them through their options. Their best interest is our primary concern.

If you live in Fresno, Clovis, Visalia, Madera, Merced, or Madera, or Merced counties in California, we might be able to help you breathe more easily. Take the first step and call our office today.