When you are not able to pay off your creditors and your bills keep piling up, bankruptcy may seem the only option for you. Alternative solutions to bankruptcy can help you get back your finances and pay down your debts.
There are five possible bankruptcy alternatives that can give solutions to your trouble.
One of the solutions is to contact your creditors and ask them to work with you on a new payment plan. They may lower the interest rates or monthly payments so that you will be able to pay off your bills.
In case you find talking with your creditors unapproachable, you can refer to the credit-counseling agency for help. The agency will contact your creditors instead of you and if they are agree with it, the agency may create a new repayment plan. The disadvantage of this alternative is that if you miss even one payment, your creditor can terminate the arrangement. This solution gives you an opportunity to make one payment to the agency, which will then distribute the money among the creditors. You should be very attentive when choosing your agency. Do your research and then make your final decision, since some agencies charge lower fees than others.
Another bankruptcy alternative is debt consolidation. Consolidating your debts into a one single loan may lower the interest rate and reduce monthly payment.
The next way to pay off your debts is to take out a home equity line if you have equity in your home. Consider the chance of losing your home in case you default on your home equity loan. The creditor can repossess your home equity in this case.
The last chance to solve your bankruptcy is to default on your debts. If you don’t have any exempt property or income to pay off your creditors, your creditors can’t take anything from you. Any debt record will remain on your credit record for seven years and affect your credit score.
It should be noted that when you fall into the bankruptcy, keep in mind consulting with a bankruptcy lawyer. S/he will advise you options proper to your situation.