Just Say No To Filing Bankruptcy
By Sherry Evans
Many people are facing the possibility of filing for bankruptcy. Sadly, many people who are in this position have been given bad or poorly explained credit advice and are wondering if there are any other alternatives to going down the road. There are options available to keep your good name and pay your debts.

Should I avoid Bankruptcy?

To begin with, filing for is a personal decision and one that can only be made by the individual in debt. Although only the individual can make this decision, there are people or companies out there that will discuss options and help debtors come to an educated decision whether to file for or to avoid it. A non-profit organization is the best avenue. Beware of companies charging outrageous fees for their services, as often they are only interested in making money from those in dire financial straits.

Often creditors harass those who are facing financial ruin to make their payments, this is because that is the only weapon they have. These threats can further add to a debtor’s confusion and stress. There are some simple things to keep in mind about debtors and who you should be paying first and who can wait. Make a priority list of the debts you should be concentrating on. Depending on your situation, if you want to keep your home and main vehicle, than you should concentrate on these two debts over your credit card or medical bills.

There is a good reason for choosing to pay other bills over medical and credit card debts. In order to take property from a debtor in the form of assets or possessions, these creditors must first take a debtor to court before they can take their property or possessions. Debts such as fines, alimony, child support, income taxes and student loans on the other hand don’t need to go through this process. By filing for it is likely these debts will still remain.

Trying to get creditors to give you a break should not be the deciding factor in choosing to go down the road. Even though this approach may bring temporary relief from lawsuits and arguments with creditors, is only a short tem solution. Once has been filed the person will be no better off than they were before. In hindsight, by avoiding bankruptcy, a person can sort out their affairs and come out a little better off than if they had chosen to file for bankruptcy.

Debt Management, How can I avoid Bankruptcy?

One of the first methods that should be used when trying to manage debt is to contact the people that you owe money to, for instance, financial institutions and credit card departments. Explain your current situation to them and see if an arrangement can be made to reduce your payments or waive late fees until you have caught up on payments.

If this fails, don’t be afraid to use the power of a good threat. Write letters to all of the creditors that money is owed to and tell them that you are likely to have to file for bankruptcy. Often the companies will try to work something out with their debtors or take less money than go to the trouble of taking debtors to court or having the debt completely wiped out during bankruptcy.

Is A Consumer Credit Counseling Service The Answer For You?

Another way to avoid and work on better debt management is to find a good Consumer Credit Counseling Service. This service will usually be a non-profit organization that will work with you and your creditors to find a solution or a better payment plan that will suit your finances.

Keep in mind the CCC is good for quieting your creditors, removing late fees, and lowering interest payments. If you have an old debt that hasn't been collected on for a while, you might want to contact an aggressive debt consolidation company. They maybe able to negotiate as much as 60% off your original debt.

By consolidating your debts into one loan you can reduce the number of creditors and fees that you will be responsible for.

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Be aware of the consolidation loan policies on transferring money from other sources to the loan, as this can sometimes be costly. Often it is possible to borrow against your home to pay debts in this manner, although this can be risky at times as you may face loosing your home if you can’t make the payments.

The other option that you may be able to exercise is to sell off your assets that have value and pay that amount off on your debts. This may seem like a difficult option, although, if you are filing for bankruptcy, it is likely you could loose all of your assets anyway.

Bankruptcy is a process that is best avoided. If a debtor does decide to file for bankruptcy, it should be because they are left with no other option. The debtor should also be aware of the debts that cannot be wiped out by the process, even then a debtor seeks the help of a Credit Counseling Service before proceeding.