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Before deciding to file for bankruptcy, it is important to make sure you have looked at all of the possible alternatives. Deciding whether or not to file bankruptcy is an important decision. Below you will find some possible alternatives to dealing with your debt.
Ignoring the problem - as much of a non solution as this may sound, it is unfortunately what many people do when debt starts piling up and getting out of control. Depending on the size of the debt, ignoring a creditor's repeated requests for payments could cause you to end up with a lien on your home. Not to mention that even for the smallest debts, creditors will call you on a constant basis to try and collect their money.
Whatever you decide to do regarding your debt problems, ignoring the problem will not help and will most likely only hinder the situation. Taking control at the first sign of a problem is your best bet.
Pay the bills - this may not be a solution for families going through financial crisis, but if the debt situation you are facing is small in size, paying the debt in full or coming to a settlement amount with the creditor may be an option for you. However, be careful about borrowing the money to pay your bills. If you can't pay your current bills, adding another loan payment to them may dig a deeper hole.
See if you can moonlight, grab a few extra hours at work or do some lawn work for some elderly neighbors if necessary to catch up if you're at the point where a little extra cash may help your situation. It may not be glamorous, but neither is having a bankruptcy on your credit record for the next ten years.
Debt consolidation - you've seen the commercials on TV. But, is a debt consolidation loan really the answer? It depends on the situation. Most debt consolidation loans are secured using your home as collateral by placing a second mortgage on the home. One of the biggest things to consider when deciding on debt consolidation is whether or not you can survive another possible financial problem without being unable to pay your debt consolidation loan which could put your home in the creditor's possession. Also be sure to research the interest rates. Some debt consolidation loans carry rates of over 16%. You'll find more in depth information on debt consolidation as an alternative to bankruptcy here.
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If you find that debt consolidation will work for you, be sure to address the reasons you got into a hole of debt in the first place. The absolute worst thing you can do is to get caught up with a debt consolidation loan, only to repeat living beyond your means to find yourself in the same situation a few years down the road, without debt consolidation as an option the next time around. Either work out a budget on your own or see a credit counselor to help you create one.
Credit counseling - very simply put, credit counseling agencies will negotiate a new payment schedule with your creditors and sometimes they will also be able to lower or stop your interest payments. Some families have found this as a solution to avoid bankruptcy and get the phone calls from creditors to stop. However, be careful in choosing an agency.
Experts say that you should avoid for profit credit counseling agencies and instead look at non profit credit counseling firms. Be sure to do your research. Check out the credit counseling options available to you thoroughly before making a decision on which one to go with. You can find our more about credit counseling as an alternative to chapter 7 or 13 here.
Bankruptcy - if you have checked out all of the options available and still think bankruptcy is the way you need to go in order to get your financial life in order, you can learn more about filing bankruptcy, choosing an attorney or buying do it yourself bankruptcy form software.
Related Articles:
+ The ins and outs of filing for bankruptcy online
+ Important information about filing for personal bankruptcy
+ How bankruptcy affects Americans each year
+ Can credit counseling help you avoid bankruptcy?
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