When you’re swimming in bills, it can seem like there’s no way to get debt relief. But there are alternatives to bankruptcy, even if your situation seems hopeless.
The benefit of filing for bankruptcy is that the process is well-established. There are specific papers to fill out and sign, certain procedures to follow in court, it’s easier to predict.
If you opt for alternative debt relief, you may have to blaze your own trail.
But the benefit is that you don’t have to deal with the downsides of bankruptcy, which are also mandated. So we have some suggestions of routes you can take that might help you deal with your debt without ruining your credit score.
- Get a debt consolidation loan. One of the big stressors of being in debt is that you owe money to a variety of organizations. It’s hard to keep track of how much you owe to whom and when you add all the “minimum payments” together, it can amount to a lot. Consolidating the debt into a single loan can lower your monthly payment and may also decrease your interest rate. The amount of debt stays the same, but paying it down is more manageable.
- Use a low interest credit card. Credit card offers in the mail can sometimes have great options, like free transfers or low interest rates for a certain amount of time. In some cases the interest is even free for six months or a year. If you’ll just use the card to rack up more debt, this isn’t a good choice. You should consider credit counseling instead. But if you can use the low interest rate to pay down your debt more quickly it might be a good idea. Then just be sure to pay down the card balance.
- Negotiate with your lenders. Your lenders want to get paid. Ideally for them, that means getting back the full amount. But in some cases getting a portion of the money sooner is preferable to waiting months or years to get the full amount. It’s true that negotiating your debt takes a lot more effort on your part, but it also has the potential to really pay off (pardon the pun) if you do it right. For pointers on negotiating, it may help to consult an attorney; after all, they do this for a living. But even if you go it alone, you may be able to lower your overall debt by figuring out a repayment plan.
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