What Alternatives are there to Filing for Bankruptcy

For many families burdened by the strains of too much debt, filing for bankruptcy is the right financial decision. Declaring bankruptcy can give people another chance to plan their finances the right way, and escape the crushing burden of unmanageable debt obligations. But bankruptcy is far from a “one size fits all” solution, and some families and individuals rightfully look for other options.

Whether you hope to avoid filing for bankruptcy because doing so would cause too much personal embarrassment, or you genuinely believe that bankruptcy isn’t in your best interest, there are alternatives out there. Here are a few of the most popular bankruptcy alternatives for you to consider.

1. Negotiation With Lenders
In most debtor-lender situations, it can feel like the person collecting the bills has all of the power. But in reality, you have a lot of ability as a borrower to negotiate with lenders that you owe debts to. Most companies will let you make smaller payments if you can prove that your income isn’t sufficient to keep up with the payments they demand, and you can even negotiate to lower interest rates and lower overall debtor balances, depending on your specific situation. Negotiating can buy you time to sort out your financials and get to a healthier place as far as your income to debt ratio is concerned.

2. Consolidate Debt
If you have a livable income but many debt obligations, half of the struggle can be keeping on top of payments and keeping everything in line. But by consolidating debt and streamlining your obligations, it can be a lot easier to stay on top of payments and avoid late payment fees. Plus, it’s usually possible to consolidate debt from multiple sources into one lower interest lender, either by taking out a lower interest loan or transferring debt to a low interest credit card. By consolidating your debt in one place, you may end up paying less, and it will be a lot easier to stay on top of payments.

3. Consult a Credit Counseling Agency
There are many community based, not-for-profit credit counseling agencies out there, and consulting such an agency can be a great alternative to avoiding bankruptcy. A credit counseling agency can help you make a repayment plan, and help you figure out how to get out of debt by managing your finances more proactively. Credit counseling agencies won’t give you any easy solutions, but the answers they do give you will help you out a lot in the long run, as you will learn better financial habits and avoid bad debt obligations in the future.

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