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Personal Bankruptcy Alternatives

Posted October 24, 2012 by Danny Duric to Financial Advice 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

The economy is tumultuous for many at this time, however there are alternative methods that one can invest their time and money into versus filing bankruptcy. Before taking a drastic measure such as personal bankruptcy, you should read this statement from the Federal Trade Commission.

Here are a few general topics to consider for a personal finance regimen:

Debt Management

Managing debt simply means living on a budget, everyday, regardless of what caused the debt or how large the debt’s balance. Although, the discipline is very strict, once starting it will become easier to maintain. Also, having unsecured debt is how this plan works more efficiently. Credit cards, personal loans, overdrafts, etc. are considered unsecured debt. A quick search online will provide hundreds of counselors with information specializing in debt management. Since secured debt involves collateral, it’s virtually impossible to keep a lower budget or change a budget without sacrificing the terms of the loan.

Debt Settlement

Settling or negotiating debt can reduce monthly installments, bill collection calls and helps in the overall frustration of stressful garnishments. A debtor will find a settlement company to work with and give them all the information on the debt, including creditors contact info and balance of the debt. The payments will be sent directly to the settlement company instead of the creditor, who keeps the funds in a trust account. The settlement company then contacts the creditors on behalf of an individual, and request an arbitration. The entire debt is reduced to an amount that both the settlement company and the creditor agree to. Depending on the influence and actions taken by the settlement company will ultimately decide how much the debt is reduced.

Debt Consolidation

Again, unsecured debt is what works for consolidating debt. Consolidation reduces the number of monthly payments from each creditor. The debt is combined into one payment that is lower than the original payments made separately. The interest rates are reduced in this plan which lengthens the time a debtor has to pay back the loan. Unpaid medical bills, cash advances and credit card debt are ideal for a consolidation. Those debts are notorious for lowering a credit score.

Do Nothing

One can continue making payments as he/she has before and not change anything. However, this becomes a viable choice if you have gone past the statute of limitations of hassles to pay outstanding debt. Every state has a different law and time frame on limitations. To become no longer liable for a debt is “time-barred” and the law protects individuals from being sued or harassed. Keep in mind, your responsibility is not completely dissolved. For many states an outstanding debt will reflect and affect your credit score for many years later. For more information on personal bankruptcy and time-barred debt, visit this FCC informative page.

Build your credit and become frugal. If you know that a new car or a fun vehicle is going to become a hindrance in your finances, wait another year before buying. Your credit history is important, and in these times, it will always be considered.

About Danny Duric: Author bio: Danny Duric is a financial manager and a content writer. His expertise is personal bankruptcy and insolvency. He helps people experiencing financial difficulties.

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