Avoid Bankruptcy – 4 bankruptcy Alternatives
If you’re like most people, you want to avoid bankruptcy. You didn’t plan to be in this situation, but now you need a way out. There have to be other options. Another way. And let’s face it, because it’s a last resort, you really, really, really want to avoid bankruptcy.
The good news is there are other options besides bankruptcy. But each option has its own dangers and drawbacks. There is no magic pill here. But when you’re brainstorming, you want to throw every option on the table, and weigh its pros and cons.
With that in mind, here are some alternatives to bankruptcy:
- Pay your debts on time: If you can afford to, you can pay your debts as they come due. This has the benefit of helping your credit score and of course, you avoid bankruptcy. But it can be costly, and let’s face it, seemingly unending.
- Nothing: Yes, that’s right. You can do nothing. Maybe that’s what you’re already doing. Not paying your debts. The good part is this is free, you’re saving money, or can. But it has drawbacks also, the key one is you’re subject to creditor harassment, lawsuits, and losing your paycheck or other assets.
- Debt consolidation: It’s also possible to consolidate your debts into one monthly payment, with the benefit of avoiding bankruptcy and having something that appears manageable. However, the down side is that often these payments don’t get distributed to your creditors and debts, and instead are held in trust, which means this feels like the “Nothing” option to your debts, and they can sue you.
- Debt Negotiation: Oftentimes, you can contact your creditors and offer to settle the debts for less than the amount owed. Pro: you just saved some money and avoided bankruptcy. Con: It takes money to pay these debts, and if they’re cutting you a deal, they usually aren’t giving you terms to make payments. And watch out for possible tax consequences.
- Bonus: Clear out your retirement or refi your house: This kind of goes with Debt Negotiation, since you’re going to need a chuck of cash to start calling up your debts. And you’re trading in one debt to pay back another (your retirement, your house, or your Uncle Bob). And generally, it’s a bad idea to touch your retirement, even if they let you.
So there you have it: 4 alternatives to avoid bankruptcy. None are perfect, and maybe none of them are even possible. Bankruptcy isn’t perfect either; it has its own drawbacks and potential negative side effects. If you’re interested in meeting to go over your options and learn the bankruptcy pros and cons as applied to your situation, contact us and let’s meet and talk it over.