If you’re struggling under the weight of crippling debt, you may be looking at bankruptcy as though you have nowhere else to turn. It’s easy to see why bankruptcy is so frightening to so many people—the impact it can have on your credit for many years to come can be significant and for that reason many people don’t even want to consider it as a viable option. However, there’s some good news: if you really feel as though bankruptcy isn’t the right choice for you or you don’t qualify, there are viable alternatives to bankruptcy that can help you get back to financial independence without resorting to the bankruptcy process. On this blog, we’ll explore a few of them.
Believe it or not, you may not have to pay back everything you owe. In fact, the vast majority of the time your creditors would rather accept less than what you owe in exchange for not having to pursue lawsuits and legal actions against you. If you incurred the debt against you in good faith, and have simply fallen behind due to circumstances beyond your control, try talking with your creditors to let them know your situation. In some cases creditors are willing to give you a reprieve to allow you time to get back on your feet before demanding payment again. Other times they’ll agree to accept less than what you owe so long as you commit to paying what you can. This isn’t always successful, but you may be surprised just how often it can work out in your favor.
Debt consolidation is the practice of taking all your outstanding debts, combining them together, and then slowly paying them off over time using one monthly payment. In some cases, creditor negotiation can help this even further by reducing the amount you owe each creditor. Once you have completed your repayment plan and your creditors have received what you owe them, they’ll discharge your debt and you can get back on your feet again!
Debt consolidation’s big benefit is that it allows you to have more predictable and controllable monthly expenses, knowing exactly how much you’re going to owe each month so you can budget appropriately. This stability and freedom from debt collection practices can be a huge relief for many debtors. However, beware companies that say they can help you with debt consolidation and promise highly-unrealistic results; often times they simply combine your debts together with little relief to your actual burden, stretch the loan over time, and then charge you a fee on top of the interest you’re paying. In the long run, you’re actually paying quite a bit more than you would otherwise.
Liquidate Your Assets
Do you have a car you can sell to make some quick cash? What about a closet full of clothing you rarely wear that you could list online and make money off of? These are both quick and simple ways to raise a little bit of extra cash that you could put towards paying off outstanding debts. Catching up on some of your bills and paying off outstanding debts can help reduce your overall monthly payments and help you start to improve your credit score once again, and you’ll do so even faster because you won’t have any bankruptcy marks on your financial history.
Before you start ignoring your financial obligations, hear us out—do not ignore the bills that come in the mail; this will only lead to more trouble. You should always do everything you can to pay off your bills. However, if you have very few assets to your name and little in the way of financial means to pay back your creditors, you’re said to be “judgement-proof” since you can utilize legal exemptions to protect what you do own from creditors. In this situation, there isn’t much that creditors can do to collect what you owe them, so you’re essentially in the clear.
However, before you try to take this tactic, you need to talk to a skilled Okemos bankruptcy lawyer to find out if you can actually put yourself in this category. You may be able to exempt some of your possessions, but not all of them, and you don’t want to make any mistakes that could hamper your ability to eventually get out of debt.
For more information about popular alternatives to bankruptcy, speak with the skilled team at White Law, PLLC today! Contact us online now to request a case evaluation.