Alternatives to Filing Bankruptcy
If you're having severe financial problems, you may no option but to file for
bankruptcy protection. And, in many cases, bankruptcy is the best option
because it does allow you to shed your old debt and get a fresh start. But,
bankruptcy may not be your only option. Depending on the severity of your
current financial struggles, you may fair better with an alternative. In any
case, you at least owe it to yourself to explore bankruptcy alternatives.
Debt consolidation is probably one of the easiest alternatives to bankruptcy. It
basically involves getting a loan at a low interest rate and then using it to pay
off all your high interest loans and credit card debt. Most debt consolidation
lenders have arrangements with credit card companies and debt collection
agencies so they're able to process your loan and get your debts paid quickly.
The end result is that you have one low interest payment each month instead
of many different payments. And, because your interest is lower, more of
your monthly payment is actually going toward reducing your debt than if
you continued making payments directly to the original creditors.
If your current debt load is simply too large to qualify for a debt
consolidation loan, you can consider debt negotiation. Using this alternative,
you'll hire a professional debt negotiator who will negotiate with your
creditors to reduce your debt. After the negotiations are complete, you'll still
pay a monthly payment to your creditors but your overall debt to each
creditor will be reduced.
Creditors are generally willing to negotiate the total amount of your debt
because they risk not getting any money if you file bankruptcy. And, they
know the involvement of a debt negotiator means you're having severe
enough problems that bankruptcy is a real possibility.
You can negotiate with your creditors yourself. But, you'll definitely have
more success if you hire someone with experience in the process.