Bankruptcy is a hot topic for a lot of people at the moment, with the economic climate and the job market leaving a lot of people with debts they simply can’t afford the repayments on each month. If this is a situation you have found yourself in, and it just keeps getting worse every month as your creditors hound you for money you just don’t have, then you may be thinking that filing for bankruptcy is the only solution. However, bankruptcy, while it can certainly help some people out of very desperate situations, is not something to be taken lightly or considered as a magic bullet that will make all your money problems go away. There are legal costs involved in filing, and also, depending on which type of bankruptcy you are eligible for, you may lose important assets, and may still have to make monthly payments towards what you owe your creditors.
Bankruptcy really is a financial last resort reserved for those with no other options, even after credit counselling, but what are some other ways you could ease your debt struggle?
Sell Assets Yourself
In bankruptcy, there are lots of assets you might lose – these vary depending on the law in your state. Instead, could you solve your debt problems and avoid filing by selling them yourself? Depending how much you owe, selling your car or even your house and switching to a cheaper option could be a solution. Or even, if your debts are less significant but still more than you can afford, selling other things like electronic gear or designer clothing may be a way to get out of the mess.
Certainly, the idea of borrowing money may not appeal if you have a problem with debt already, but if you could get a casual loan from your friends or family that you can pay back in a structured but manageable way, you may be able to avoid bankruptcy. You may also be able to get a loan or advance from your employer. While it is difficult raising these kinds of problems, you may find that people didn’t realize how much trouble you were in and will be happy to help you if they can.
You may be able to avoid having to go bankrupt by choosing instead a debt restructuring or debt consolidation plan. This is where your debts are taken on by a company who rolls them all into one monthly lump sum. You will usually find this sum to be less than you are paying now, and also because you only have to pay the debt management company you won’t have to deal with aggressive pursuit by your individual creditors – you’ll never have to speak to them again.
Of course, these solutions aren’t available, suitable or sufficient for every debtor, and there are situations where bankruptcy is necessary. If you have nothing to sell, nobody who can lend you money, and debt consolidation won’t be enough to save your finances, you may still need to file. If you have weighed up all the alternatives and can’t find an answer, then the best thing you can do is look for an affordable local bankruptcy attorney and find out what you need to do to start procedures.
Holly Oakes is no stranger to financial problems. After racking up some large debts in 2011 she was forced to consolidate her debts into an affordable monthly repayment. She also enrolled in credit counselling classes and is now well on the way to becoming debt free.
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