Bankruptcy is Not Your ONLY Option: Review These Bankruptcy Alternatives Before It's Too Late...
Bankruptcy is not cheap. Beyond the hard costs (lawyers, filing fees, etc.) you have other considerations that may not come to mind.
Let me put this into perspective. You fall behind on your bills, as most folks do at some time in their lives. If could be for a myriad of reasons; anything from losing a job to illness in the family.
The point is that you can't keep up with the debts. Collection agencies start calling the house. You're at risk of foreclosure. You have a constant eye out for the car repo truck. To get this weight off of your shoulders, you opt to file bankruptcy. You call up the local lawyer, pay the fee, and begin the process of filing Chapter 7.
Your investment so far = $300 - $2,000
It doesn't end there. Now that you have a bankruptcy on your credit report you have to wait 7 years for it to be removed. Banks won't want to lend to you. That means that you'll be renting an apartment, instead of building equity in your own home.
You'll have terrible payment terms if you need to borrow or anything from a car to student loans. And if you apply for any jobs that require credit checks (financial jobs, some govt. jobs) your potential employer won't be thrilled to see a bankruptcy on the report.
Your investment now = $?? (More than you want to spend)
This is why it's in your best interest to avoid bankruptcy to the best of your abilities. This article will give you two alternatives to filing bankruptcy, to save you the headache and the money.
Alternative #1: What About Asking For a Debt Reduction??
As the name alludes, debt reduction is basically getting a lender to lower the amount you owe them. It's great for the lender, since most lenders know that getting any kind of recoup on their loan is difficult after bankruptcy is filed. Some won't see any payment at all. It's great for you, since you'll no longer have to file for bankruptcy and you can pay the debt that's left at a manageable pace.
The most common debt reduction is a loan modification on residential mortgages. These have gained popularity in way wake of the "subprime meltdown". Since then, it's not uncommon for a bank to lower your monthly payments or change an adjustable rate mortgage to a fixed rate.
Other debtors, such as credit card companies, are often willing to do the same.
Here's a secret: you don't need one of the popular (and expensive) loan modification companies to get a debt reduction on your mortgage. You can call the bank directly, and they are usually happier to work with the owner than with a 3rd party.
Alternative #2: About Debt Consolidation Companies
There exist organizations that will buy all of your existing debt, lump it into a single sum, and then offer you a more appealing payment schedule. From there, you only have to deal with one company and one interest rate.
This is a great option for those with multiple debtors. The payment terms are usually much easier, making it easy to catch up on your debt with your current income.
When choosing debt consolidation company, make sure to take note of the interest rate you agree to. While it may feel easy to jump at a lower monthly payment, you'll be doing yourself more harm than good if your new interest rate is twice what it was (which means you'll be paying the debt for much longer).
How to use this information
These alternatives can only help if you put them to work. Action is the decision maker, as the cliche goes.
With that said, I highly suggest that you call your banks and credit card agencies today to see if any debt reduction can be authorized. If they still won't budge, start looking into consolidation companies. You can find many by doing a simple search online.
So just do it.Today.