In today's economy, it doesn't take much to find yourself facing financial disaster. A lost job, divorce or even a medical emergency can leave you drowning in debt with no way out. When the creditors start hounding you, your thoughts may turn to personal bankruptcy. Before you decide on bankruptcy, a remedy that could take years to recover from, you might want to consider other options. Here are a few potential solutions to your current financial crisis.
Family Loan
If you have family members who are able to assist, you can use a family loan to pay off smaller debts. This is particularly helpful if you have numerous low-debt creditors, such as small credit cards or minor medical bills. Once you clear up the small debt, you can focus on keeping up with your larger obligations, such as house and cars.
Debt Consolidation Loan
If you have larger debts that you're struggling to pay, you may want to consider taking out a debt consolidation loan. A debt consolidation loan will allow you to pay off larger debts and consolidate your payments into one convenient monthly payment. The downside to this type of loan is that it must be secured with some type of collateral, such as a second mortgage on your home. You must stay current on your loan payments or you risk losing your home.
Payment Restructuring
In many cases, creditors will work with you to reduce your monthly payments. If you are able to pay lower monthly bills, you might want to discuss payment restructuring with your creditors. In some instances, mortgage companies and auto finance companies will even move several payments to the end of the contract period. This will allow you to have several months without bills, which may give you the time you need to get back on your feet financially.
Sell Off Assets
If you file for bankruptcy, you may have to liquidate your assets. A bankruptcy trustee will oversee the liquidation and your money will go to pay off as much of your debt as possible. Unfortunately, you may not get true value out of your property. If you sell off your own assets to pay down your debt, you may be able to pay off enough of your bills to avoid bankruptcy.
If you're being hounded by creditors, you need relief. Before you file for personal bankruptcy, you owe it to yourself to investigate the other options that might be available to you. Once you've exhausted all other avenues, be sure to sit down and discuss your financial situation with an attorney, such as those found at Lanier & Pagel LLP.
