There are ways to avoid bankruptcy. In this article, you will learn about three ways or methods that some individuals and families use to get a fresh financial start by settling their debt.
These three methods are:
1: Offer in Compromise
2: Debt Consolidation
3: Debt Negotiation
Avoid Bankruptcy: Option1
Offer in Compromise
If you have a lump sum of money that you can promptly pay to your creditors, often they will accept less than 100% of the debt. This is good because it will get you out of debt for less than the full amount you owe.
The reality is you must have the money readily available. Generally, creditors will not reduce their debt and let you make long term payments, so they want your payment “now “. If you don’t have a significant amount of money to pay them now, consider:
Avoid Bankruptcy: Option 2: Debt Consolidation
This is where you total up all your debts to all your creditors and then take out a new loan to make one larger payment each month. The downside is this often does not reduce the total of your monthly payments, and does not reduce the debt that you owe, all it does is make it convenient to write one check instead of several.
In fact, sometimes interest-rates on his debt consolidation loan is higher than the interest rate on some of the debts you’re paying off, and if it’s a long-term loan it will keep you in debt and negatively affect your credit for a longer period of time. If this does not appeal to you or you can’t get approved for a new, bigger loan, consider:
If you have a lump sum of money that you can promptly pay to your creditors, often they will except less than 100% of the debt.
Avoid Bankruptcy: Option 3: Debt Negotiation
This is where you would negotiate with creditors to repay your debts over a specific period, often between two and four years. Your creditors would have to agree to accept less than 100 percent and they usually require you to make payments for several years. This method not only requires you to pay a substantial portion of your debt, but it keeps you in debt for years before you can get a fresh start.
So basically, you’re keeping yourself in debt, forcing your credit score to remain low, and obligating yourself to pay back your creditors. If these three options do not help you avoid bankruptcy, then it is definitely time for you sit down with a qualified bankruptcy attorney to explore if bankruptcy is the most cost-effective method to help you get back on financial track.
If you qualify for Chapter 7 you could get completely debt-free, usually within 3 to 4 months, and pay no unsecured creditors, with a few exceptions including child support, alimony. some taxes, or student loans. You may choose to keep your car(s) and pay as well. Most chapter 7 debtors choose to keep their house and cars simply keep monthly payments current.
In fact, most debtors lose nothing, yet become debt-free when the case is closed, usually within 3-4 months. It’s a little-known fact that your credit score usually goes UP when you file a Chapter 7. In fact, many people can buy a new car right after their Chapter 7 is discharged by the court.
A Chapter 13 bankruptcy can be very helpful to keep your home out of foreclosure. You make a budget, make a repayment plan, and pay debt through your budgeted plan.
Many homes have been saved from foreclosure and unsecured debts discharged through a reasonable, affordable chapter 13 plan.
