Alternative Choices to Bankruptcy

Having to file for bankruptcy is certainly not desirable. Although large business corporations do it, this is very different from private individuals doing so. If at all possible, it is best to avoid bankruptcy. Alternatives to bankruptcy can offer a way to avoid the bad consequences of bankruptcy.

Debt consolidation loans are one option. These loans combine all of your debt into one lump sum. Reasonable payments are then made to the bank loaning the money and to the creditors to whom the money is owed.

Unsecured debt refers to debt on credit that was not given based on collateral. This is the type of debt is accumulated on credit cards from banks, gas stations, and department stores. Unsecured is also the most difficult for creditors to receive back from individuals who have been extended credit.

A debt consolidation agency can give you a loan if you are unable to receive one from a bank. Such agencies hire skilled negotiators that are quite accustomed to dealing with credit card companies and are often able to make agreements with creditors in your favor. When you use a debt consolidation agency, you only have to pay them and then they distribute your payment to the creditors you owe. The employees at these agencies can sometimes lower the balance of debt by sixty percent.

While the judge in a bankruptcy court might decide that your assets must be liquidated and used to pay the debts you owe, this will not occur if you decide to consolidate your debt and continue to make payments on it.

Getting a second job can also help you avoid declaring bankruptcy. The income you gain from it can be used entirely towards paying off your debts. You could also ask to work overtime if your situation does not allow you to pick up another job. Your goal is to increase the amount of money coming in every month.

The second job can be a way to supplement your income while you are paying off a debt consolidation loan. Things come up without warning and you may need more cash than you have available. A second job will help you to save for a rainy day and still make payments on your debt.

You could also consider starting a home business. For those who are in a time crunch that prevents a second job, a home business may be right up your alley. Most can be started with little or no money. Selling products on eBay can bring in money when you need it most.

Do you have a special skill? Market that to others who could use your services. Remember to earmark the money to be used for resolution of debt and not to spend freely and incur more debt.

Finding some way to get rid of your debt on your own is definitely preferable to filing for bankruptcy. Remember that any adjustments you have to make in order to eliminate your debts will not be permanent and they are serving a good purpose: establishing you financial well being.