Alternatives To Personal Bankruptcy
Friday, April 4th, 2008 Subscribe To Our Feed
If you find yourself in a financial mess, a solution that might spring to mind is filing for bankruptcy. However you should never take this decision lightly. First off, investigate all the alternatives to personal bankruptcy first and make an informed decision. This article will give you a few ideas, ranging from the obvious to the not so obvious, before filing for bankruptcy.
Think about a debt consolidation loan. Debt consolidation means that all of your debt is put together and a loan secured for the total amount. Creditors are paid what is owed to them and the bank that issued the loan is given a monthly payment that is within reason for the consumer.
Debt consolidation mostly includes unsecured debt. This would be credit cards, store credit cards, unsecured lines of credit from companies, and gas cards. Unsecured debt is what creditors have a hard time recouping from people because it is not backed up by any collateral.
If you can’t find a bank that will give you a debt consolidation loan, go through an agency. The agency counselors are used to working with creditors and will negotiate on your behalf. They can get your debt dropped by as much as sixty percent. You then make just one monthly payment to the agency, and they take care of the rest with the creditors.
Debt consolidation does not involve liquidating your assets. With bankruptcy proceedings, the court may rule that you have to sell your belongings to pay the creditors. Debt consolidation allows you to keep the things that you have and comes up with another solution.
Another option is to get a second job. It isn’t pleasant, but if getting another job will allow you to make a sizable credit card payment each month for a year or two until the debt is eliminated, then it will prove to be well worth it. If a second job is not feasible, ask about overtime at your current job. You need to find a way to make more money if you want to reduce your debt.
The second job can be a way to supplement your income while you are paying off a debt consolidation loan. Things come up without warning and you may need more cash than you have available. A second job will help you to save for a rainy day and still make payments on your debt.
You could also consider starting a home business. For those who are in a time crunch that prevents a second job, a home business may be right up your alley. Most can be started with little or no money. Selling products on eBay can bring in money when you need it most.
Do you have a special skill? Market that to others who could use your services. Remember to earmark the money to be used for resolution of debt and not to spend freely and incur more debt.
Bankruptcy is not the only way to go when you have financial problems. Indeed, bankruptcy may even be a worse option than combining some of the ideas above to get out of debt. Bankruptcy may not turn out how you expected it to if you do not understand the bankruptcy laws well anyhow.
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