Alternatives to Bankruptcy
Here are some options for debt relief that do not require bankruptcy:
Work With Your Lender
If you are behind on payments for your home loan, car loan, or any secured debt, try and work with your lender to pay off the payments that you missed. Most lenders are willing to cooperate with you because it helps them get paid. However, the lender will probably give you only a certain amount of time to pay what you owe to them. Also make sure you get any payment plan agreement in writing, and make sure that the plan is one you can stick to considering your regular monthly income and bills.
Negotiate With Your Creditors
You can try negotiating with your creditors. When a creditor contacts you about what you owe, ask them if you can set up a payment plan. If your creditors have not contacted you yet, call their Customer Service phone number and ask to speak to someone about a possible payment plan. Tell them how much you can reasonably afford to pay each month and see if your creditor will allow you to do that. Before you agree, make sure you understand how much more you will have to pay, including the interest per month. Also, make sure you get the agreement in writing.
Give Up The Property
You can give up the property back to the lender. This will usually stop the amount of the debt from growing while you cannot pay it, and the lender will not have to file a lawsuit against you. However, you will lose everything that you put into the property, and your credit score will go down.
By doing nothing, you will eventually lose your home or car. This gives you the benefit of using the property until the lender is able to take the property from you. However, it also means you risk getting additional debt. This happens if the property is sold for less than you owed. You also risk being ordered to pay the lender’s attorneys fees. If the amount of the debt is large enough, the lender may decide to collect the unsecured debt too. As a result of doing nothing, your credit score will also go down.
While some of these alternatives may work in your situation, keep in mind doing nothing changes nothing. By taking responsibility for your financial hardships, you can work towards a better tomorrow. However, if these options do not work in your situation, consider consulting an experienced bankruptcy attorney about what debt relief options you have.