Options to Avoid Bankruptcy

Americans, especially over the past few years, have been searching for and finding alternatives to bankruptcy. Not only do debtors seek an alternative to bankruptcy so they can rid of their debt but also so they can rid of the stress and anxiety of having debt. For many people a non-bankruptcy course of action has been the solution to their stressful debt problems. There are several alternatives debtors should consider before going through with a Chapter 7 or Chapter 13 Bankruptcy.

If a debtor has the financial means to make payments to creditors but simply does not want to have creditors hassle them when they miss a payment every now and again, bankruptcy is not the wisest choice. There several federal and state laws relating to debt collection that a debtor can take advantage of when facing harassing creditors.

Negotiation is a wonderful alternative to bankruptcy. Many debtors who have some type of income or own assets can easily negotiate with the creditors for any amounts they owe them. Many times negotiation allows a debtor to get their self back on their feet, while at the same time the creditor will reduce the amount of debt owed.

For those people who are uncomfortable negotiating with creditors, outside help can always come in beneficial. There are a large number of debt counseling agencies who are available to help debtors contact their creditors and negotiate for a reduction in debt owed.

Many debt counseling agencies will require the debtor to undergo financial counseling, which means the service provider and the debtor will sit down and come up with a plan to pay back creditors, but the paying back takes place over an extended period of time.

Some debtors choose to have their assets liquidated. Having one’s assets liquidated is similar to a Chapter 7 bankruptcy; however, asset liquidation does not come with such a harmful effect to one’s credit report. This alternative to bankruptcy is only advised to debtors who own a lot of personal property.

Simply enough, for some the best alternative for a debtor to resort to is doing nothing. A debtor cannot be thrown in jail for not paying their creditors. And in many cases a creditor will not pursue legal action because they know the debtor does not have anything worth taking them to court for. Most creditors will right off the debt owed as a tax right off, and the debtor’s credit score will be damaged for a period of time no longer than 7 years.