Bankruptcy Alternatives
Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. In most cases personal bankruptcy is initiated by the bankrupt individual. Bankruptcy is a legal process that discharges most debts, but has the disadvantage of making it more difficult for an individual to borrow in the future. To avoid the negative impacts of personal bankruptcy, individuals have a number of bankruptcy alternatives.
Take No Action
Bankruptcy prevents a person's creditors from obtaining a judgment against them. With a judgment a creditor can attempt to garnish wages or seize certain types of property. However, if a debtor has no wages (because they are unemployed or retired) and has no property, they are "judgment proof", meaning a judgment would have no impact on their financial situation. Creditors typically do not initiate legal action against a debtor with no assets, because it's unlikely they could collect the judgment. If enough time passes, typically seven to ten years, the debt is removed from the debtor's credit history.
A debtor with no assets or income cannot be garnished by a creditor, and therefore the "Take No Action" approach may be the correct option, particularly if the debtor does not expect to have a steady income or property a creditor could attempt to seize.
Self Money Management
Debt is a result of spending more than one's income in a given period. To reduce debt, the most obvious solution is to reduce monthly spending to allow extra cash flow to service debt. This can be done by creating a personal budget and analyzing expenses to find areas to reduce expenses.
Most people, when reviewing a written list of their monthly expenses, can find ways to reduce expenses. Common areas for expense reduction would include reducing food expenses by eating out less often, taking public transportation instead of driving a car, and eliminating enhanced telephone and cable television services.
Alternatively, the best method to resolve financial hardship is to increase one's income to a level sufficient to satisfy their monthly debt service. While this is often easier said than done, nonetheless, it should be an approach taken by debtors to get out of debt.
Negotiate With Creditors
Creditors understand that bankruptcy is an option for debtors with excessive debt, so most creditors are willing to negotiate a settlement so that they receive a portion of their money, instead of risking losing everything by the debtor choosing to file bankruptcy.
Negotiation is a viable alternative if the debtor has sufficient income, or has assets that can be liquidated so that the proceeds can be applied against the debt. Negotiation may also buy the debtor some time to rebuild their finances. To learn more about debt settlements call 1800 DEBT.COM for a free debt consultation with a certified debt management professional.
Debt Consolidation
Debt is a problem if the interest payments are greater than the debtor can afford. Debt consolidation typically involves borrowing from one lender (typically a bank), at a low rate of interest, sufficient funds to repay a number of higher interest rate debts (such as credit cards). By consolidating debts, the debtor replaces many payments to many different creditors with one monthly payment to one creditor, thereby simplifying their monthly budget. In addition, the lower interest rate means that more of the debtor's monthly payment is applied against the principal of the loan, resulting in faster debt repayment. It may be necessary to have a co-signor or other security, such as a car, if the borrow's credit is not sufficient on their own.
Debt Consolidation is also a term used for consumers that enroll in a Debt Management program through a consumer credit counseling service. This program is often the best alternative for consumers having money troubles. The credit counseling service can typically arrange for lower money payments, reduce interest and reage accounts that are past due, thereby stoping late fees from accruing. In most cases, enrolled clients are able to get out of debt in 4 to 6 years. To learn more about debt management programs call 1800 DEBT.COM for a free debt consultation with a certified debt professional.
Speak To A Certified Debt Professional
We strongly suggest that prior to filing for bankruptcy or engaging the services of any debt relief service that you first speak to several debt professionals. Obviously you can call anyone that you wish and speaking to 3 or more debt professionals may prove very beneficial in finding the right solution. So, by all means, be sure to check out the various resources listed on this page and website. If you do believe that filing bankruptcy is the right decision for you, to locate a qualified bankruptcy attorney in your local area, we suggest that you call toll-free 877-828-0606.
We highly recommend, however, that in your research you call 1800 DEBT.COM for a FREE debt consultation. By calling this number you will not only be able to speak immediately to a "certified" debt specialist, but based on the area code you're calling from, your call will automatically be routed to a debt professional in your local area. Today, each state has their own laws, regulations and licensing requirements, so it's important to speak with someone who is familiar with your particular area.
In addition, the certified debt specialist will be able to assist you in various ways depending on your particular situation. So do yourself and your loved ones a favor and call right now and speak to a debt professional. The call is absolutely free, completely confidential and there is no obligation whatsoever. You truly have nothing to lose, except, that is — your debt!
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