If you are struggling with debt, it may be time to file bankruptcy. Before you file, though, there are a few bankruptcy alternatives that are worth considering.
If you have some piled up credit card debt, you can get a good counseling company to make payments to your credit card companies. You pay the counseling company, and they will regularly pay your monthly credit card bill.
It is convenient and lowers the interest and credit rates. It also waives late fees and stops the collection activities. In addition, it can help you save money and get out of debt. You can contact a bankruptcy lawyer to see if this is the right option for you.
If you have a huge debt to pay, you can negotiate with your creditors and offer to pay them less than what’s due. Your lender might agree as they would want to get at least something from you. There are some disadvantages to it as your credit report will reflect that the paid debt was less than what was agreed earlier.
Also, if the lender forgives some of the debt, it will be counted as revenue, and you will have to pay tax on it. It’s best to talk to a tax professional in such a case.
If you can sell an asset for some quick cash, consider it as an option. For example, you can sell your stocks or bonds. You can even think about selling your car, which will help you settle your debts quickly. Many people find this difficult as they often have an emotional bond with their assets.
While it’s a difficult decision, keep in mind that it may make you debt-free and, hence, stress-free. Selling off assets is better than declaring bankruptcy. It’s best to let go of property that you’re emotionally attached to than keeping them and staying stressed and under debt.
Debt Consolidation Loan
You can avoid falling behind with some creditors by getting a debt consolidation loan. This loan will collectively cover all other debts, and may substantially lower your monthly expenditures. For example, a home equity loan can help you repay all of your creditors.
However, keep in mind that if you’re unable to pay the home equity loan, the bank or the lending institution can evict you. If you don’t have home equity, you can try some other assets depending on the amount of loan that you have to repay.
When you had money, you lived your life according to that situation. Now that you’re in debt, with possibly no way out, living the same lifestyle does not make sense.
You must make some lifestyle changes and switch to a more frugal way of living. It may take some time, but you’ll get used to it. As soon as you’ve paid your debts and started saving, you can go back to the same lifestyle again.
Consider All Bankruptcy Alternatives
Being under debt is not a good feeling. However, bankruptcy is not the only solution. When in doubt, always consult a good bankruptcy lawyer. They will be able to guide you better on how to get out of the situation.
The bankruptcy alternatives outlined above are for your consideration only. If you have mountainous debts, and feel the weight of all the stress that goes along with that, filing bankruptcy may be your best option. ♦