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Alternatives to bankruptcy

Bankruptcy alternatives, alternatives to bankruptcy

When you are neck deep in debt, would you look at going bankrupt as the only way out? Does declaring oneself bankrupt offer any peace of mind from burgeoning debts and from the endless numbers of harassing creditors? Be aware that becoming bankrupt or filing for bankruptcy is nothing but borrowing more headaches for a longer period. Bankruptcy must be considered as the last resort to tackle your helpless financial situation. Before that one needs to look at alternatives and make informed choices to tackle debts. The good news is that there are several alternatives to bankruptcy and you can hope to lead an almost normal life even while taking time to tide over your present crisis.

Before we discuss the different alternatives to bankruptcy, it may be important to find out the advantages of bankruptcy alternatives over bankruptcy and understand reasons why financial experts and consultants prefer to suggest options of bankruptcy alternatives over bankruptcy. If a person is declared bankrupt, there is no say in any of his/her holdings for at least another seven to ten years. Worse is the mental agony to see your personal holdings like your home, your car and other belongings go under the hammer in some very cheap deals. Moreover, filing for bankruptcy itself can be an expensive affair, not something that could be easily handled in the financial state the debtor is in.

By not filing for bankruptcy, the person, at least has the option of being open to finding assistance in educating himself on the various bankruptcy alternatives. He /she will ensure that the person does not commit mistakes of the past and be better prepared and more careful in the future. Also, a person looking for alternatives to bankruptcy will understand that there are options of making a one-time payment of all his/her debts and credit card accounts.

According to financial consultants, a person looking for alternatives to bankruptcy should start from the very basics. To start with, they say everything is a matter of luck and there is no harm trying to settle for any formal and informal arrangements for debt settlements. Take for example, an informal debt settlement procedure known as family arrangement. In this procedure, the person in debt can seek to have an informal negotiation or a compromise with his/her creditor.

Sometimes debtors may be lucky enough to seek a good compromise if creditors, with their discretion can wave off a huge sum of debt. While this is an option worth a try, it is however, the creditor’s prudence to wave off the debt. For all this and more, it is very advisable to consult an insolvency practitioner or the local citizens’ advice bureau or any related agency for help and details.

If the person has a steady source of income and is capable of clearing some debt amount on a weekly or monthly basis, a court administration procedure is also a convenient proposition. In this method, one of the creditors will move a court order against the debtor and the debtor is expected to make regular payments to the court and the court will receive the amount on behalf of creditors. Though this option is considered to be a good alternative to bankruptcy, the debtor in this case, is expected not to make any mistakes in the payments, lest the debtor will face severe restrictions like a bankrupt.

Going by the larger picture, all financial advisors recommend debt consolidation or debt elimination programs to debtors at some point or the other. There are several companies offering these options to any number of helpless debtors. Their work is to consolidate all credits and work out a new lower payment rate for debtors, a sum that is expected to be cleared by six to eight weeks.

The second alternative to consider is debt elimination programs. This may be worked out with a debt negotiation company. In this method of debt settlement, the company facilitates payments to creditors, a sum amounting up to about 50 percent of the credit amount. This is a one time payment. The debt negotiation company, on your behalf, attempts to negotiate with the creditors a payment of just about half the credit amount. Either the company pays the negotiated amount to the creditors or pays the sum after the debtor manages to accumulate the negotiated amount. In this concept therefore, the debtor manages to do away with the credit by just repaying only half the credit amount, thanks to the negotiating company. It does take quite an effort for the debt negotiating companies to get the creditors to agree and settle for part payment of the debt amount.

The United States presently has an unending number of companies to help people with financial problems. So rest assured, there is no reason to think of filing for bankruptcy as there are various simple debt repayment plans and programs to help debtors overcome their financial crisis. It is worthwhile to try the luck of the draw in settling huge debt amounts by finding good alternatives to bankruptcies before filing for bankruptcy.

Published: 2008-01-28
Author: Paawana Poonacha Cariappa

About the author or the publisher
Byline articles for publications,PR content for corporates, syndicated articles for bigwigs, rhymes and short stories for children, and poetry for the like-minded...taking forward over 10 years experience as journalist/writer, presently working as Content Head for a Mumbai-based communications firm. You can view my bylines as "Paawana Poonacha" or "Paawana Poonacha Cariappa".

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