Alternatives to Bankruptcy
There is just no easy way to get out of debt, you have to face up to the consequences. A
bankruptcy is not always the answer, as the effects are long lasting. There are four ways
to handle debts that are out of control, listed in best to worst in regards to the effect
it will have on your credit:
If your credit isn't in terrible shape, can you reduce your other expenses, even if it
means making hard choices or just change your lifestyle to fit your income? Some ways to
do this:
1.Selling the second car
2.Pulling equity out of your home
3.Applying for a non-secured signature loan
4.Loan from a relative
5.Selling your home and paying off your debts with the proceeds and then renting
6.Cashing out your 401K/retirement benefits
7.Selling family heirlooms/jewelry/guns
If your credit is already gone or one of the above isn't an option, go through Consumer
Credit Counseling Services (CCCS). Check your yellow pages for the local number. In this
way you're paying off your debts as if you were in a Chapter 13 BK, but you don't file a
BK.
If CCCS won't take you, you may want to consider bankruptcy. Doing a Ch13 takes longer,
but your credit is in a little better standing than if you do a Ch 7. In the Ch 13 they
give you up to 5 years to pay off your debts. The disadvantage is that you're in BK for up
to 5 years plus your credit report shows your BK for 7 more years after you have finished
paying off your debts.
If you are so far in debt that you can never repay it, then the best solution may be a
Chapter 7 BK. A Ch 7 is the least desirable credit-wise, but you are typically out of BK
in 6 months and you don't have to repay any debt. The disadvantage is that this shows on
your credit report for 10 years from the date of filing your BK, and creditors are
starting to tighten their credit requirements, and you may have a tough time getting
future financing.
There is no magic solution. Don't believe anyone who tells you otherwise. |
Your Credit! Alternatives to
Bankruptcy
How to Avoid Foreclosure
Chapter 7 Bankruptcy
Bankruptcy and Bills
Bankruptcy and Bill Collectors
Your Personal Property
Your House and Car
About The Bankruptcy Process
Bankruptcy Questions and Answers |
