In the modern world, where the economy keeps shooting sky-high, debt has become a way of life for many individuals, and entrepreneurs at large. On this, many of the affected parties may presume that filing for bankruptcy is the only way out. From a financial advisor’s point of view, filing Chapter 7 or Chapter 13 bankruptcy can have adverse effects on your credit score. That’s enough reason why you shouldn’t consider it as your only option. So, what should you do? If you are looking for an answer to this question, this article is for you.
Here are the alternatives that may save you from bankruptcy and spare your credit.
1. Sell Your Stuff
There is no need to have all sorts of assets idling around your home, while your creditors are on your neck all the time. Instead of waiting until it’s time to declare yourself bankrupt, you can start by selling whatever you can spare around your home. This should be among the first steps to make when you realize that you can’t keep up with the payments. Failure to do so, you may delay the payments, and get caught up by further actions from your creditors.
Whether it’s the jewelry that you no longer use or extra furniture, it doesn’t matter. As long as the item can fetch some cash, it’s recommended to go ahead with the sale. Today, and thanks to the power of the internet, you can quickly post all these items on eBay or Craigslist. One good thing about these platforms is that they are easy to use, and have a line of willing buyers looking to own the items you post there.
2. Seek Help from Family and Friends
Your family and close friends should be the first people to contact in time of difficulties. Although borrowing from friends and family is deemed as a bad idea, there’s an exception to the rule, and that’s when bankruptcy is knocking your door. One thing to note is that the borrowing can break the relationship with the people you care about, and that’s if you fail to honor the deadlines. Therefore, you should consider this alternative if you have a working plan in mind and that won’t disappoint.
When dealing with this kind of borrowing, it’s recommended that you start by calculating the amount of cash you need to avoid bankruptcy. Then, carefully consider how much you can contribute to the debt. With the figures, it’s much easier to convince your target that you need some financial assistance.
3. Negotiate Your Way Out
Why should you allow yourself into bankruptcy while you can negotiate your way out? One thing to note is that your creditor is in business. Therefore, there is no way your creditor will accept to lose all the money after you file for bankruptcy. He or she would instead get some share. What does this mean for you? It’s an indication that you can liaise with your creditor, and see the way forward. The best remedy is to approach your creditor with a genuine reason that you are having financial difficulties, and you want to avoid bankruptcy.
The idea here is to express your willingness to pay the debt and request for a reduction in monthly payments or interest rates. Most lending institutions have hardship programs intended for such situations. Therefore, you will be lucky to establish a payment plan that works for both you and the creditor.
4. Debt Settlement
In an ideal setting, debt settlement is a move that should be avoided, but in reality, it’s recommended. If you read this page, you will learn that there are many other alternatives of bankruptcy and one of them is debt settlement. This is a debt reduction approach in which it allows you to pay a lump sum that is less than the amount you originally owe by negotiating a settlement with your creditor through a third party. This is when a Licensed Insolvency Trustee comes into the picture. When it comes to this approach, it should be done right. That is why hiring the services of a professional to help with making debt settlements with your creditors is the wisest move. The Licensed Insolvency Trustee will act as a referee and will do the negotiations using their knowledge and expertise to come up with a process that is fair to all parties.
5. Seek the Help of Consumer Credit Counseling
More often than not, all the tips mentioned above may not work in your favor. Does this mean that you give up and file for bankruptcy, messing with your credit? The answer is no, as there is still a way out, and that involves seeking professional help. It would help much if you considered the help of a consumer credit counselor to walk you out. Most of these counselors are experienced when it comes to working with creditors. Through their support, you can quickly get your repayment and interest rates reduced. New bankruptcy laws require credit counseling before filing for bankruptcy.
Debt is the way of life for many individuals, not forgetting the entrepreneurs. On this, many individuals find themselves, assuming that filing for bankruptcy is their only way out of the menace. It’s not your only way out, and there are many bankruptcy alternatives, as mentioned in this piece. You can borrow either of the mentioned hacks or utilize all based on the situation at hand.