Alternatives to Filing For Bankruptcy

Before you consider filing for personal bankruptcy, there are alternatives that you could evaluate for yourself. The first would be a debt settlement. In this option you hire negotiators from a company to deal with your creditors and reach an amicable decision on lowering the debt owed. This is a good option for those who are unable to manage even their minimum amounts due each month. It is also an ideal option for those who don’t have equity in the form of a home, land or other assets. It is considered the fastest and cheapest way to becoming debt free that declaring bankruptcy.
In the credit counseling option, you discuss with the creditors and negotiate a lower rate of interest. This reduces the burden substantially. Though safer, it can get considerably expensive. On an average, the debtor is able to become free of his debts within a 5 year span.
Declaring bankruptcy under Chapter 13 will have you on a repayment plan. A court appointed official will take control of your disposable income and this is channeled into your various debts. This can take up to 5 years. This is a good option to relieve you of secured debts like car or housing loans. This is not a good idea for credit card holders as it can turn out to be a much more expensive proposition. Chapter 7 on the other hand is a severe and last ditch option. In this case, you will be relieved of all your unsecured debt such as credit cards, medical bills etc. But you will have to surrender your fixed assets to be sold and the proceeds distributed between your creditors.
For those who own a lot of property, liquidating your assets would be a good option to declaring personal bankruptcy. This can also be done in the case of filing under Chapter 7. Based on exemptions and possible surplus that you may have, it’s best to sell your assets and clear off your debts rather than declare bankruptcy. In all cases, you will have to have an experienced debt lawyer with you. Make sure you hire the services of a company or individual that comes well recommended.

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