BEFORE YOU DECIDE TO FILE, THINK ABOUT THE ALTERNATIVES TO BANKRUPTCY

Bankruptcy should be the last resort to getting out of
debt. It will stay on your credit report for up to 10
years, guaranteeing that you will receive higher than
normal interest rates on future financing close to the
bankruptcy filing. Some debts will remain anyway such as
recent IRS debt, student loan debt and debt incurred
through fraud just to name a few. Bankruptcy may be better
for someone who has little income, extremely high
liabilities and no realistic way of paying those
liabilities back within a reasonable time period.

HAVE YOU CONSIDERED?

There are steps to consider prior to filing that are
alternatives to filing bankruptcy.

1) Negotiate with your creditors. It may be possible to
work out deals with some of your creditors. Explain you
current financial situation, your inability to
realistically pay the entire debt and your willingness to
pay a percentage of the debt over time. I have found that
most credit card companies are rarely willing to make such
arrangements. However, you never know until you ask. They
may be willing to work with you if they feel that a
bankruptcy is looming in the distance. They no that if you
file bankruptcy, they will likely receive nothing in return.

2) Debt consolidation loans. This may be a way to
payoff all of your unsecured credit card debts with one
loan that can actually reduce your monthly outlay. If you
do this type of consolidation loan, make sure that you do
not use your credit cards during your repayment term. This
can cause you to fall even further behind by incurring new
debt on credit cards that were just reduced to zero by the
consolidation loan. Caution! Do not take out a
consolidation loan against your home. You may have just
turned dischargeable credit card debt into secured debt
that can cause you to lose your home if not paid back
timely.

3) Consumer Credit Counseling Services. CCCS may be able
to negotiate effectively with your creditors even after
your efforts have failed. Those efforts may include
reducing financing charges, lowering monthly payments and
updating past due accounts. For credit counseling to be
effective, you must be able to make consistent payments
over a long period of time (40 – 60 months).

4) CCCS will also provide educational material in an
effort to help you avoid financial pitfalls in the future.
Make sure that you are aware of the charges that your
credit counseling services charges and to what extent your
payments will be going to your creditors.

5) Handling the debt on your own. If you have sufficient
income, can budget effectively and can communicate with
your creditors, you may want to handle the matter yourself.
You will have to contact each creditor in an effort to
work out some form of payment arrangement. While some
creditors will be open to this offer, most will not be
interested. Unless you can make arrangements with all of
your creditors, there is nothing preventing one creditor
from filing suit and collecting the debt through legal
means.

SOME OPTIONS TO SERIOUSLY AVOID AT ALL COST

Financial pressure can cause individuals to make decisions
that are not in their best long term financial interest.
One option to avoid is the payday loan or title loan. The
interest rate is often 200% or more annual percentage rate
(APR). Consumers often struggle to pay these loans in full
and often will extend the loan for another term. This debt
cycle escalates to the point where the consumer is paying
more in loan fees than the amount that was actually
borrowed.

Predatory consolidation loans should also be avoided. A
common predatory loan is a refinance of an existing loan
that is packed with excessive fees, contains a higher than
normal interest rate and provides little or no benefit to
the borrower. The pay back on these loans in terms of fees
and costs may actually exceed the original amount of the
loan. The attempt to end the debt may actually increase
the total debt.

About the Author:
David M. Siegel is the author of Chapter 7 Success: The
Complete Guide to Surviving Personal Bankruptcy. He is a
member of the American Bankruptcy Institute and currently
practices bankruptcy law in Chicago and its surrounding
suburbs. Additional information is available at
http://www.chapter7success.com/ .

John V
JohnC.Vincent/CEO/The Opt-In Magic System
http://CreditSurvivor.blogspot.com
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