November 14, 2019
Anyone can find themselves dealing with debt that they can’t manage effectively. The only way to put an end to the collection calls and the sleepless nights is to come up with a plan to regain control of your finances. There are several strategies other than bankruptcy that you can explore. Here are four alternatives to consider.
Selling Assets to Eliminate Debt
Do you have assets or belongings that could be parted with if necessary? If so, this is one way to generate the funds needed to reduce or eliminate the debt. It can be hard to let go of things like family heirlooms or belongings that have a great deal of personal attachment, but getting back on sound financial footing can make the sale worth it.
If you have stocks, bonds, or real estate other than the home where you live, selling some of those assets could also be the solution. Keep in mind that what you have to sell may take some time to sell. It could be weeks or months until someone is willing to meet your asking price. In the meantime, your debt situation is getting worse.
Opting for Debt Consolidation
Debt consolidation is a process that involves paying off individual debts by securing a loan that you will repay in a series of installment payments. This can work well, especially if the interest rate on the consolidation loan is equal to or lower than the rates on most of those debts. In most cases, the amount of the installment payment will be less than the cumulative payments that you’ve been making on all those other debts.
The thing about debt consolidation is that you will need a decent credit score. There may also be the need to pledge some collateral. If you don’t have an asset and your score has already taken a hit, this option may not be available to you.
Seeking to Settle Debts with Your Creditors
Debt settlement is a solution that involves working closely with your creditors to determine what sort of payments they will accept in full settlement of your balance. Your goal is to pay a reduced amount within a timeframe agreeable to the creditor. While your accounts will be closed, you will owe nothing to the creditor once that is made.
Whether you approach this task yourself or hire a debt settlement company, understand that creditors do not have to accept a reduced settlement amount. If they refuse, you must still repay the outstanding balances, plus any fees or penalties added by the creditor.
Obtaining a Loan from Family Members
One last solution to this situation involves going to loved ones and asking if they would be willing to extend a personal loan. You could then use the money to settle those outstanding debts and focus your attention on repaying just one obligation. Assuming that you refrain from accumulating additional debt, this approach could work.
Keep in mind there are some risks with this approach. One of the most common is that the arrangement may place stress on your personal relationships. Even if you repay the debt on time, there may be some who won’t let you forget what took place. Should you lose your job for any reason and be unable to make the loan payments, additional hard feelings may result. Remember that there’s no one single solution which works for everyone. Make sure you evaluate the merits and the potential drawbacks associated with each approach. If you find them lacking for any reason, schedule a consultation with a bankruptcy attorney. Once you learn what’s involved with bankruptcy and determine if you are eligible to file, it will be easier to make the decision that’s right for you.