5 Alternatives to Bankruptcy that Might Work For You
Excessive debt wreaks havoc on your life. Daily phone calls and demand letters from collection agencies cause even more stress when you simply do not have enough money to pay the bills. Debt is a problem that won’t go away unless you do something about it, and tackling the problem is the only way to solve it. Here are a few suggestions that could help you.
Reduce Expenses
This is the easiest way to find extra money to pay your bills. If you rent, then move to a less expensive apartment at the end of your lease. Cancel cable, internet and unnecessary services on your cell phones. Sell any vehicles with car loans. Reduce your expenses until they match your current income. If you find that your recurring expenses are still higher than your income, you will need to find a higher income. Whether you pick up some overtime, or a side job delivering pizza’s, you need a way to bring in more cash if your expenses are higher than your income.
Canceling services does not mean doing without them. Free WI-fi is almost everywhere. Take your laptop to a free WI-fi zone when you want to surf the internet or watch a television show. Additionally, most cell phones connect to the internet. Where possible, share services with someone else, and buy less expensive brands. Buy as much as you can used, rather than new, pour all of your energy into freeing up more of your income into paying off debt. You might be surprised that you have more time to work when you no longer have cable, and this extra zeal for work could be what your manager needs to see to give you a raise or promotion.
Negotiate Lower Payments
Design a new budget with these lower expenses. Decide how much you can afford to pay toward each bill. Call the credit card companies to negotiate a lower payment. Explain what you have done to lower expenses. They might offer a temporary reduction and possibly void some of the late fees. If you do work out an agreement with one of your creditors to lower payments, be sure to have the agreement in writing, along with a guarantee that they will not penalize your credit for lowering your payment. Even you are bound and determined to avoid bankruptcy, you still might want to speak with a good lawyer like Chapter 7 attorneys Lefkovitz & Lefkovitz before signing any contracts. As a general rule, debt collectors don’t care so much about your needs, but they are happy to get some money, rather than none at all. A good attorney can help you review the contract, and give you some help negotiating. If possible, avoid giving out your bank account info as part of this negotiation. While you may have their guarantee that they will take a lower payment, you don’t want to give them the opportunity to zero out your account and take everything at once.
The CCCS
The Consumer Credit Counseling Service works on your behalf to make arrangements with your creditors. You must earn enough money to make at least 50 percent of your normal monthly payment. Otherwise, they will not accept you into the program. Most debt reduction plans from the CCCS are built to pay off all debt within 3-5 years, and require you to keep to a strict budget. If you need help disciplining your spending, and you’re ready to take some good advice, and legitimate non-profit organization like the CCCS might be what you need.
Refinance
Homeowners with equity might consider refinancing their home. The good part is that you would have the money to pay your debts in full and preserve your credit rating. With home values rising, and interest rates still near their historic lows, home buyers who were stuck in upside down mortgages might qualify now for a traditional refinance or HARP (Home Affordable Refinancing Program) loan. This could lower your payments, but you still need to solve the underlying problem that first caused the debts. If you pay the debts but continue with an expensive lifestyle, you might lose your home. Be careful to use the money you are saving on your house payments to pay off more debt and free up even more money for payments.
Debt Consolidation
If you have been turned away by CCCS and rejected for refinancing, then consider debt consolidation. Basically, you agree to pay a portion of the debt over a period of less than 5 years. You can do this yourself or through a debt consolidation company. If you decide to go through a debt consolidator, first check them out with the Better Business Bureau. Also, be aware that their fees will increase your level of indebtedness. Be careful to avoid for-profit debt consolidation companies who often destroy your credit in the process of dealing with your creditors. Many of these less reputable organizations advertise heavily, but they won’t pay a single cent on your debt till they have recovered their fee in the form of payments from you, at which point, your credit may be in bad shape.
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Category: Bankruptcy
