Some Alternatives to Bankruptcy

2007-03-08 10:33:40

( Financial )



Your credit history contains all records of payments that you have made in the past. Any declarations of bankruptcies will also appear on your credit records, and can have an adverse effect on your future credit applications, and remain in your credit records for a certain number of years. Mortgages after bankruptcy and other types of loan applications are more difficult to obtain and if approved, higher interest rates are normally given as a result of your adverse credit line.

There are a number of alternatives to bankruptcy that can be opted for, whether you are encountering financial problems as an individual, or while running your own business.

If you have no source of income, or do not own any property or assets you can ignore all follow ups for payments. You cannot be sued because you do not have anything that can be liquidated, or converted to cash to pay your creditors.

If you own certain assets then one of the alternatives to bankruptcy that you can opt for is to renegotiate any existing loans that you may have. Creditors will most likely allow you to extend your payment terms, and lower the interest rate of your loan depending on the amount that you owe.

Seeking credit counseling is also one of the alternatives to bankruptcy. A credit counseling company can assist you in consolidating all of your debts, get in touch with all of your creditors and negotiate for a better repayment scheme with a lower interest rate. Making payments to numerous creditors will cease, and one check is usually issued to the credit counseling agency, which in turn will pay all of your creditors on your behalf.

The above only shows the most common options for alternatives to bankruptcy. There are other alternatives that are most likely available, and you can get the advice of a credit counselor on this.

In the event that you still feel that bankruptcy is the only option for you, a lawyer should be sought for details on laws on bankruptcy, and its implications.


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