Alternatives To Filing For Bankruptcy
If you or your business is experiencing financial difficulties, you may consider filing for bankruptcy, to finally find relief from your debts. You may choose from the three most commonly used bankruptcy provisions - Chapter 7, Chapter 11 and Chapter 13. All these provisions are under the US Bankruptcy Law, and can be filed voluntarily or involuntarily.
However, this debt relief option should be chosen only as a last resort. It is always a good idea to consider other alternatives first, before settling with a bankruptcy option. You should thoroughly look into each option, the organization or agency providing these bankruptcy alternatives, ensuring that these agencies will not further deepen your financial troubles. Just beware of alternatives which might have a positive or negative impact on your subsequent bankruptcy petition.
The most common bankruptcy alternatives include undergoing a debt counseling service, do an out-of-court settlement, and get debt consolidation loans.
(1) Debt Counseling Service - going for this bankruptcy alternative may be more advantageous to you in terms of aiding you in how to effectively deal with your financial troubles. This is more helpful if you do not want to negotiate on your own and you can have outside assistance in improving your financial figure. This service can consolidate your regular payment schedules as well as obtain payment or interest reductions on your unsecured loans. You must qualify for this service and eligibility mainly entails your ability to repay debts over a managed period of time. This is almost similar to a Chapter 13 bankruptcy provision, without protection from credit collection actions. Before choosing this bankruptcy alternative, bear in mind that this could have a negative impact on your credit rating. (2) Out-of-Court Settlement - instead of filing for bankruptcy, you can settle your unsecured debts at reduced sums. This usually works if you have some income or assets which you are willing to sell to pay off your debts. Moreover, negotiating with your creditors may give you more time to get back on your feet to enable you to pay them back, or even have your creditors agree on receiving less money than you owed them. Individuals seldom choose this option independently, but they can go for this bankruptcy alternative through the assistance of a company which can negotiate with their creditors. Same as the debt counseling service bankruptcy alternative, this option could have a negative effect on your credit rating. (3) Debt Consolidation Loans - another bankruptcy alternative is by borrowing against your property's (home) equity. You have to carefully consider this option, ensuring that you are not exacerbating your financial troubles as this can potentially lead to the loss of your home in the event of your inability to make payments under this alternative. Given all these bankruptcy alternatives, you should have enough leeway to settle your debts. In fact, you may find out that you need not go for these alternatives or even file for bankruptcy if you are just being harassed by your creditors. You can easily get over these harassments under the protection of US Federal and State collection laws.
| 