Alternatives to Bankruptcy

In today's economic climate, a vast amount of people are dealing with the loss of their job, having difficulty finding a new one, and underwater mortgages. A poor economy can also have a direct correlation between marital stresses; hence more divorces and more money issues.

Between unemployment, losing one's home to foreclosure, and divorce, millions of Americans are experiencing serious financial turmoil. These types of problems lead people down the path to consider filing for bankruptcy. Even people, who don't suffer from any of the above afflictions, can be contending with mountains of medical bills that equally create a substantial amount of stress.

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A car accident, or a life-threatening disease such as cancer can costs hundreds of thousands of dollars if not more, and these numbers are even greater if the sickened or injured individual is not covered by some kind of insurance. Having a serious illness in a family, can wreak havoc on a family's finances. These families can drain their 401k, breadwinners can be forced out of the workforce due to their injuries or illness, or they can be forced to care for an injured or ill spouse or child. All of which, can make it impossible for the family members to keep up with their medical bills, let alone their daily living expenses. Being in this situation can be quite exasperating, leaving families desperate for a reasonable solution.

When people are having serious difficulties keeping up with their monthly or daily living expenses, they should consider all of their debt relief options. Some people may not qualify for a Chapter 7 (debt liquidation) bankruptcy, where others may qualify for a Chapter 13 (debt reorganization) bankruptcy instead. Some people may wish to avoid filing for bankruptcy altogether and therefore, may wish to examine their alternatives to bankruptcy.

Bankruptcy is a personal choice, and people have to weigh all of the advantages of filing bankruptcy against the disadvantages of filing for bankruptcy before they make an official decision. One alternative to bankruptcy is debt consolidation. With debt consolidation, the debtor takes out one large loan to pay off all the smaller loans. Typically, the larger loan has a lower interest rate; therefore, the debtor pays less in the long run.

Another alternative to bankruptcy is debt settlement. With debt settlement, a bankruptcy attorney contacts your creditors and negotiates with them for smaller balances and/or lower interest rates. The goal is for the lawyer to come up with an agreement that is lower than what you owed previously, and as a result of this agreement the payments become more affordable.

Loan modification is also a tool that a bankruptcy lawyer may use when helping a debtor. With loan modification, the terms and conditions of your mortgage are lowered so that your monthly payments are lowered and made more manageable.

With both loan modification and debt settlement, the concept is that creditors usually prefer to get something out of the debtor as opposed to nothing, which is what would happen to some creditors (namely unsecured creditors) if the debtor were to file for bankruptcy.

If you are presently dealing with out of control debt, and if you would like to learn more from a qualified attorney about all the debt relief options available to you, then contact a bankruptcy attorney as soon as reasonably possible. They may be able to help you take back control of your finances so you can face a brighter tomorrow through bankruptcy alternatives.

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