Alternatives to Bankruptcy
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The first bankruptcy alternative to exercise is debt assessment. It is generally accepted that if more than 20 per cent of your net income goes towards debt, other than for your mortgage, you are beyond your means. If you are unaware of how much you actually owe in debts and/or only make minimum payments, you need to take early bankruptcy alternative measures.
The next step to take is to make a budget. If you can figure out what you are spending money on now, by means of a spending log, you will be able to make a more effective budget. And once this is made, stick to it! Sacrificing a few luxuries now will pay dividends when your are debt-free.
Working towards a bankruptcy alternative takes persistence. Try calling your creditors and asking for a lower interest rate or lower monthly payments for a time. If they know that you are thinking seriously about bankruptcy, they should be more willing to work with you. If you go bankrupt, they may not get a complete repayment; however, if they work with you over time, they should.
Another bankruptcy alternative may be debt consolidation. This means that you take out a personal loan that would cover all pre-existing unsecured debts. In general, these loans have lower rates of interest than, for example, credit card rates. And, this means that you only have one loan to manage.However, treat this solution with caution and be realistic about how much of a difference it will make to your monthly financial commitments. After all, you are essentially replacing one debt with another.
Debt management and settlement is another bankruptcy alternative, although it involves an outside party. It is very important that you check out this negotiating company with the Consumer Credit Counselling Service or another such agency, as scams are common in this industry. This bankruptcy alternative involves having the hired agency contact your creditors and try to reduce the amount that you owe and renegotiate a payment schedule.
Although they take time and persistent effort on your part, there are several bankruptcy alternatives available. Considering a bankruptcy stays on your credit report for between seven and eleven years, they are worth trying.