While bankruptcy can be a great tool to help you get out from under your debt burden, it can have lasting effects. Filing for bankruptcy can cost you your property and possessions and wreck your credit score. In addition, bankruptcies are expensive.
So what can you do if you decide not to file for bankruptcy? Below, we’ve included three of the best alternatives to bankruptcy.
For a lot of people, keeping on top of multiple credit cards, bills, and debts can be pretty overwhelming. It’s often easier to pay off your debts if you only have to make one payment a month. Fortunately, there are several ways for you to consolidate your debts. You can use a debt consolidation loan to consolidate your debts and lower your interest rate. Alternatively, you can lower your interest rate by transferring your debts to a low interest credit card.
Creditors often lose out when their debtors file for bankruptcy. In a Chapter 7 bankruptcy, for instance, a debtor’s assets are sold off to pay creditors. If the proceeds aren’t enough to cover the debtor’s debts, the unpaid creditors are out of luck in most cases. Therefore, many creditors are open to negotiating a repayment plan. Debtors should push for lower interest rates and monthly payments when negotiating with their creditors.
Debt Management Plan
Debtors often have a hard time negotiating with creditors. Therefore, many debtors turn to credit-counseling agencies to help them make a debt management plan. An agency will create a repayment plan for you based on your income and debts. You’ll then make a single payment each month to the credit agency to work toward paying off your debts.
If you have any questions about alternatives to bankruptcy or bankruptcy law in general, you may want to consult with an attorney.