Thursday, January 17, 2013

Alternatives to Bankruptcy

Bankruptcy is a scary option so as much as possible, you may want to look for alternatives that will steer you away from it.

Truth be told, there are financial situations that can only be solved by bankruptcy. It will, after all, provide you with a speedy release from your credit problems - at least if you qualify for a Chapter 7 bankruptcy. Filing for this is best for those who has little income or has most of it going to their basic necessity expenses.

However, even if you fit the perfect description of someone who can get a Chapter 7 bankruptcy, you need to approach it with great caution. If you want to escape the stigma that only bankruptcy can bring, then you may want to work a bit harder on your debt by opting for another debt relief program.

The obvious alternative is to grow your income or cut back on your expenses so you have more money to allot to debt payments. The idea is to grow your disposable income. This is probably harder because you will either work longer hours or deprive yourself of the things that you got used to. Getting out of debt really requires some form of sacrifice so it all boils down to how much you can really give up. Some couples end up having the husband working 2 jobs while the wife stays at home to take care of the kids and household chores alone. Some are lucky enough to stumble upon a passive income that provides them with a significant addition to their monthly cash flow.

If your efforts to increase your disposable income is not possible, then hope is not yet lost. You have options like debt settlement that will help reduce the outstanding balance on your credit account. This can be done through proper negotiation with your creditors and proving to them that you are in  a financial crisis. This option can damage your credit score because the whole process involves defaulting on your payments deliberately. However, that decrease will not be as significant as bankruptcy.

Check the reasons why you want to go through bankruptcy. If you just want to stop your creditors and collectors from harassing you, then you should read about the FDCPA or Fair Debt Collection Practices Act. It will educate you on how you should be treated and your rights as a debtor and consumer.

Apart from these alternatives, there are other debt relief options that you can utilize. Know what they are and find out the best program that can help relieve you of your credit problems. Go to National Debt Relief for more information.

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