Call now to schedule your consultation: 505.503.1637

Leading Financial and Family Law Attorneys

Is a Debtor and Creditor Workout Right for You?

Before you file for bankruptcy or foreclosure, consider a debtor and creditor workout.

A debtor and creditor workout, or non-bankruptcy workout, is an agreement negotiated between you and your creditors on how to settle your debts without bankruptcy. This type of debt modification allows debtors to restructure part or all of their debt, while avoiding the disrepute of bankruptcy.


There are two elements to a debtor and creditor workout – compositions and extensions. A composition is when a creditor agrees to accept a partial repayment of a debt, and an extension is when they agree to extend deadlines for payment. You and your creditors may agree to both compositions and extensions in your negotiations.

Advantages and disadvantages of a debtor and creditor workout

Debtor and creditor workouts are voluntary agreements, which means that your creditors don’t have to accept the terms you offer. However, if they refuse the offer, they forfeit their ability to claim the offered repayment later. It is also possible for some, but not all, of your creditors to accept the terms you offer.

A debtor and creditor workout can apply to many kinds of debt. It may also be an option for avoiding foreclosure if you’re underwater on your mortgage. This type of negotiation is known as a loan workout, since it pertains only to one debt and one creditor.

Is a debtor and creditor workout right for you?

A debtor and creditor workout does not preclude you from filing bankruptcy. If things don’t work out, that option is still on the table. Although debtor and creditor workouts are a good option for some, they are not a one size fits all solution. For some, this type of agreement may just delay an inevitable future bankruptcy.

If you’re considering a debtor and creditor workout or bankruptcy, you need an experienced attorney to represent your interests. Give us a call at New Mexico Financial Law today.

We are a debt relief agency and have practiced bankruptcy law for a combined 50 years. Our services include helping individuals and couples file for bankruptcy relief under the Bankruptcy Code. 

Let’s Talk.

Enter your details below to schedule a consultation.