Why You Must Consider Bankruptcy Alternatives
By Jon Arnold
Bankruptcy is an ugly place to be, no doubt about that. Hopefully at the point of considering filing for bankruptcy, you have learned what got you into this position and are already making plans to ensure that this position does not occur to you again. You hopefully also understand that this is significantly different than the game of Monopoly where you can just roll the dice and start over – filing for is much different than that, unfortunately.

Do not declare personal until you have considered all of your options and alternatives. The very last solution to debt relief should be the consideration of bankruptcy, and there are various alternatives that should be considered first. Although it may sound like an easy and attractive solution for your dismal financial situation at this point in time, should be the last option anyone should resort to.

Why do I say that? Because declaring is going to haunt you for a very long time, like about 7 to 10 years. This will be a huge red flag on your credit report from all three of the major credit reporting bureaus for this amount of time, and future lenders will see that and either decline your loan or credit request, or charge you an astronomical interest rate with your approval, where neither of those two possibilities are attractive.

Before you file for bankruptcy, you should make sure to consider all possible options first. One popular option would be debt consolidation. If for example you have $2000 in monthly payments going out to a dozen different lenders, all of whom are charging you interest rates (and perhaps interest rates that are higher than they should or could be), a debt consolidation loan may be your best option. With such a loan, you can pay off these creditors and just have a single payment due, where you are now only paying interest on ONE loan and the amount of your monthly obligation is likely to be much lower than the sum total of your previous obligations.

Another option would be to work with your creditors. Nothing upsets a creditor more than your silence. Work with them, explain your situation and see what kind of options you can work on on a creditor-by-creditor basis. More often than not, lenders realize that if you declare bankruptcy, much of your decision to do so will be due in part to their lack of willingness to work with you and make things more bearable for you, and in which case, they will likely only get back pennies on the dollar for the money you owe them. Things that can be done would include deferred payments, refinancing the loan to make for lower monthly payments, and/or lowering your interest rate.

Yes, it will require some effort to talk to each of your creditors about this individually, and it may not be comfortable. But I can guarantee that the effort you put forth to do this is going to be much more comfortable than your other option

of filing for bankruptcy.

The bottom line is to make sure you have investigated all possible options. Visit the web site below for more possible options and alternatives. If it ends up where you do need to file for bankruptcy, make sure you know your rights, how to approach it, and how to do it correctly so that you don’t end up in a worse position than you are right now.

Jon is a computer engineer who maintains web sites on a variety of topics based on his knowledge and experience. You can read more about and Alternatives at his web site at Bankruptcy Advice.