What are the alternatives to Bankruptcy?
The debt help industry is doing brisk business and helping innumerable debtors in the process. Not that there are no debt help organizations offering debt help free of cost. These are usually referred to as the non- profit making organizations that operate with the help of donations. There are other debt help options you can opt
for if you don’t want to file bankruptcy. They are referred to as bankruptcy alternatives.
The different bankruptcy alternatives that can make you debt free are as follows-
It is not necessary that you have to approach a credit counselor, only if you are in debt. If you are anticipating a financial crisis in the near future, you can take help of a credit counselor who can suggest methods so that you don’t reach a point when your debts pile up.
Debt consolidation
Debt consolidation is one of the most widely availed bankruptcy alternatives. It can make your debts more manageable. When you consolidate your debts, you merge all your debts into one. You can either opt for a debt consolidation loan or enroll for debt consolidation program. If you take a consolidation loan, you have to pay a single creditor and you take out a loan of an amount that is equal to the outstanding balance of all debts taken together.
In case of a debt consolidation program, you hire the services of a debt consolidation company. You authorize the company to work on your behalf. They talk to your creditors and request them to lower the interest rate. Since the interest rate is reduced, your monthly payments also get lowered. A new repayment plan is worked out and you are required to make payments as per the new repayment plan.
Debt settlement
Debt settlement also referred to as debt arbitration or debt negotiation is another bankruptcy alternative. In debt settlement your outstanding debt is reduced by as much as 40% to 60%. If you hire the services of a debt settlement company, they talk to the creditors to lower the outstanding amount. In debt settlement you don’t make payments to the creditors for sometime. Instead, you pay the same amount into a trust account. When 50% of the amount you owe gets accumulated, negotiation with creditors begins and you request them for the settlement.
Debt management
Debt management or DMP as it is commonly known as is also a bankruptcy alternative. The debt management company assesses your financial condition. Your total outstanding balance, interest rates and other details of debts are taken into account. The debt management firm tries to lower your interest rates and monthly payments. A new repayment plan is also worked out so that you are in a position to pay off debts in a comfortable manner. The process goes on for a period of 3 to 4 years.
Self repayment plan
In a self repayment plan you try to solve your debt problems on your own without taking help of a debt relief company. You make a list of all your debts, the interest rates attracted by each. You also prepare a budget so that you can manage your finance accordingly.
Debts become a threat if they start controlling your life and take away your sleep. So, before you reach such a point, make sure that you don’t allow your debts to attain such proportion.
For more information:
Debt Consolidation | Debt Consolidation Loans & Finance Experts – The Australian Lending Centre is a specialist in debt consolidation and a leading supplier of financial services including home loans, personal loans, business loans, investment loans and debtor finance.
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