Bankruptcy Alternatives to Consider Before You Declare

Many decisions cannot be reversed when it comes to the brutal world of personal finance. Think bankruptcy is the only option? Read on to learn about some great alternatives. A bankruptcy will stay on your credit report for up to seven to ten years, and can drag your credit score significantly down. You will have a hard time qualifying for new loans, credit, leases, and even cell phone plans. Furthermore, most people do not realize that bankruptcy will not discharge your student loans. If a large part of your debt is student loans, then this may not be the option for you.

Student Debt and Home Loans

Those with student loan debt need to understand your options. Lenders want their money, so they will work closely with you to come up with an effective plan. They may be able to lower your interest rate or restructure the loan over a longer period of time, resulting in lower monthly payments. Consider that same technique with your home loan. It's their job to work closely with you, so take advantage of them and what they offer. But if you're in a predicament where you can no longer afford your home, consider selling it and either renting or living with friends or relatives.

Take Action, Get Debt Counseling

Answer the phone the next time your credit card company calls. Make them work for the salaries that come from your high interest payments. Tell them why you can't make your payments. The last thing they want is to have to write off your account and send it to a collection agency, because they will lose a lot of money. It may take some extensive answering of questions, but in almost every case they will help you reduce your monthly payment. Debt consolidation and counseling could also benefit you greatly.

Cut Expenses

Trimming your budget can free up a good deal of extra money. Cut off your cable, cancel the gym membership, take the internet off your phone, make your food and coffee at home, use coupons, and be conservative with your water and power. If you have some extra unused items around the house, hold a garage sale to get some extra cash. A large part of getting out of debt, according to a Halifax debt management specialist from WBLI Incorporated, is changing the habits which led to it in the first place. If you still need extra money after this, you may need to get a better paying job, or a second job to supplement the first.

You do have more options than you may think. It calls for a bit of negotiating and hard work, but in so many cases, you can avoid bankruptcy.