Bankruptcy, Debt Consolidation NEWS

Alternatives to Bankruptcy

Published by admin on December 4, 2009

If you have a large amount of debts that you are unable to pay, bankruptcy might be the best solution, but in some cases, you could try some alternatives, as they could fit better your situations.

Solving Creditor Harassment

If your main issue is the harassment of the creditors, you should know that filing bankruptcy would not necessarily help you with that. The best solution to your problem is to learn about the local state laws regarding debt collection, which can help you against abusive and harassing conduct of the creditors.

Negotiations with the Creditors

Few people know that if they are on the brink of bankruptcy, they can negotiate directly with the creditors and obtain an out-of-court settlement. If you have a steady income or some assets that you are willing to sell, these negotiations can be quite profitable for you, because this could buy you some time or even you could see your debt reduced by quite a substantial amount. For the creditors, it is better to get a part of the money they gave you, rather than see the complete amount disappear with your bankrupcy.

Debt Consolidation

Credit card debt is the worst kind of loan you could possibly get: if you do not pay your credit card in time, you could end up paying up a yearly interest rate of 20-40%. A solution to these cards is to get a debt consolidation loan with a lower interest rate and repay with it the credit cards. Just beware that if you have a longer term, the total amount you could pay up could be higher than the original. Generally, it is a bad idea to consolidate the unsecured credit card loans against your house, because this way you could end up losing your home, if you cannot pay the monthly payment.

Debt Counseling Services

Debt counseling services can help you consolidate your payments and obtain reductions for the interest rates on your unsecured debts. However, many people who are in a bad financial state could not qualify for such services, as they cannot pay even the lower monthly payments.

Do Nothing Solution

A surprising solution to your debts problem could be to simply ignore them. This is valid in the case in which you have little income and property and you want a simple life. The creditors cannot take basic things needed for your life (like regular clothing, food, basic furniture, unemployment/housing benefits) and you cannot be thrown in jail unless you fail to pay taxes for your incomes or if you refuse to pay child support. The creditors will not sue you because even if they win, they will not get anything from you, and it makes sense not to waste money on trials.

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