Should I File
Bankruptcy?
Talk To
a Local Bankruptcy Attorney
Call Toll Free
1-877-805-2270
Unfortunately with our economy close to a depression and
unemployment at the highest rate in decades this question is on
the minds of more people today than ever. Some people file
bankruptcy when buried in debt because they have quickly
concluded there is no other way out. Bankruptcy is never an
easy decision to make and never should be done without
thoroughly examining all available alternatives. Protections
under bankruptcy law should be absolutely the last choice
left.
Here are Four Alternatives to Personal
Bankruptcy.
- Debt Refinancing
- Consolidation of Debt
- Settlement of Debts
- Creditor Negotiation
Debt Refinancing
If you are a homeowner and still have equity in your home the
first alternative to evaluate is taking out a second mortgage
on your home to pay off your high interest credit card, auto
loan and other consumer debt. This will eliminate several bills
and turn them into one much lower payment that will be easier
to handle each month. It will also lower the interest cost you
are paying on the debt substantially because you will be
providing collateral for the new loan which reduces the risk of
lending the money to you and thus allows your bank to charge
lower interest. In order to qualify for this type of loan you
will have to qualify with a reasonable credit history and
income. By doing this you will be financing your consumer debt
for several years rather than paying it off in a much shorter
time period which will drive your total interest cost up.
However, if you can secure debt refinancing with a second
mortgage you will be much better off filing bankruptcy. Just
make sure you DO NOT run your credit cards up again and fall
into a much deeper hole!
Debts Consolidation
Many debt management programs will take over the management of
your finances. They will help you to make and stay on a budget
and, more importantly, work with your creditors to consolidate
your debt into an affordable single payment. With this kind of
program you make one monthly payment to the debt management
company and they disperse your funds to your creditors on a
creditor agreed to and approved schedule. This makes it easy
for you as you are no longer dealing with creditors calling and
writing you about your late payments. Often your counselor will
also get late fees waived and interest rates lowered. If your
stick with the program you will be debt free generally in three
to five years. If this is a viable option make sure you sign up
with a reputable firm and understand the fees, terms and
conditions associated with the program.Again this will be much
less painful than learning how to file bankruptcy.
Settlement of Debts
Debt settlement is a service offered by my law firms. If your
creditors think you are likely to file bankruptcy they are
willing to settle for less than you owe them rather than
settling for nothing. This is an option to use when it looks
like others will not work and you are getting close to a
bankruptcy filing. Creditors such as credit card companies do
this every day. In order to make this work you must have the
money in hand to pay the settled amount agreed to by your
creditors as soon as you come to an agreement. They should
agree to then close your account and report paid as agreed to
all three credit bureaus upon receipt of your check. You should
not attempt this on your own. They have been through this many
times and will be much better at the game than you. Debt
settlement should not hurt your credit score nearly as much as
bankruptcy.<
Debt Negotiation
Although it is difficult for individuals rather than lawyers to
get creditors to write down the balance owed, it is possible
for you to negotiate with your creditors and get some
concessions on your own. If you contact your creditors and
advise them you are considering personal bankruptcy then ask
them to waive late penalty fees, lower punitive interest rates
or maybe even stop finance charges altogether, and arrange a
payment schedule often times you will be successful. It is very
helpful if you make a good faith effort in this process by
making some kind of payment to them right away. By getting to
the point where you are actually reducing your balance on your
statements each month rather than sinking deeper under
penalties and interest charges you will eventually work your
way out. This takes commitment to and good communication with
your creditors. Make sure to talk to someone that has the
authority to negotiate with you. Just think if you could avoid
bankruptcy by doing this!
Talk To a Local Bankruptcy
Attorney
Call Toll Free
1-877-805-2270
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