While the protections that come with filing bankruptcy might sound like a major relief to many people in debt, it’s important to remember the long-lasting ramifications bankruptcy can have on your financial life. For some people, these ramifications are well worth the protections – but for others, filing bankruptcy just might be an unnecessary backwards step on the path toward a better financial future.
If you’re on the fence about filing for bankruptcy, try to read through these alternatives to filing that might present the solutions that you’re looking for. If there is a way to avoid filing bankruptcy and still get out of your financial mess, there’s a good chance that that way is the exact path you need to take from here on out. Let’s take a closer look at some popular alternatives to filing for bankruptcy.
Negotiation with Creditors
Debt is why you’re filing for bankruptcy; perhaps less of it can help you avoid it altogether. There is no straightforward legal process for carrying out negotiation with creditors, which also means there are no guarantees of success. But it’s another tool you have in your arsenal for dealing with all of this debt. Negotiating a payment plan on your chief debt, for example, might be a big enough victory for you to reconsider the entire bankruptcy idea altogether.
But there are two important things to keep in mind if you decide to negotiate with creditors: first, that you can’t bank on a future increase in income. You have to budget and plan sensibly, not counting on the fact that you’ll get that unguaranteed raise or promotion.
Second, you have to have the patience for what could be a long-haul negotiation. It might take a lot of time, research, and commitment to make sure that you can successfully negotiate; if you’re willing to do this, then you have a good chance at success.
Part With Luxuries
Avoiding bankruptcy will be worth a lot of money to your future financial success because you avoid a potentially disastrous blow to your credit rating. If you recognize just how important good credit is, it might be time to sell some of your possessions in order to avoid bankruptcy. If you have a second car you don’t really need, you can hit two birds with one stone: ending the superfluous car payments and putting some more money back in your bank account.
This can be a major strain on a household, of course, which is why this is simply another option you’ll want to consider. If you aren’t sure about what to do, it may be time to meet with a credit counselor who will be able to give you more detailed advice relevant to your specific situation.
Whatever your options, it’s important to remember that knowledge is power. The more you know about bankruptcy, the better. But that doesn’t mean bankruptcy should be off the table, either. You have to do whatever it takes to get yourself on solid financial footing.