Bankruptcy Alternative: Do They Exist?

2007-03-08 10:33:40

( Legal )



You may not be aware that there are several simple bankruptcy alternatives before you succumb to declaring yourself bankrupt. Unfortunately, most people are also not aware of this fact either because after being harassed by the collection agency through numerous phone calls and letters threatening all kinds of legal actions against them, they are afraid that these credit companies will not want to work with them. You may also think that your creditors would demand payment in full, which you could not afford. Sometimes they do. If you are worried about your mortgages after bankruptcy, there are several alternatives worth considering before you declare yourself bankrupt.

First, forbearance. This bankruptcy alternative refers to your arrangements with your mortgage company wherein they allow you to pay less than the actual amount you owe or even nothing depending on the current situation you are in.

Second, loan modifications. This means you change the original terms of your mortgage. This bankruptcy alternative gives you a fixed-rate loan with lower monthly payments. Your missed payments are included in the loan amount and they give you more years to pay off your debts.

A third bankruptcy alternative is reinstatements. This allows you to zero out your accounts with your creditors by paying a specified lump sum to the company at a future date.

You have to keep in mind that alternatives are not only for those people who have existing mortgages on their homes. Alternatives also exist for credit cards and personal loans.

You also have to understand that a lot of creditors will not be that easy to negotiate with. If you are afraid of facing your creditors on your own, you may want to hire a bankruptcy attorney. For a fee, your attorney can call your credit or mortgage company and secure a constructive agreement for you.


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