5 Alternatives to Filing Bankruptcy

Posted on December 12th, 2014

When you’re facing a financial meltdown, sometimes filing bankruptcy appears to be the only way out. However, there are many ways to save your finances without sacrificing your credit or possessions. These are five alternatives to filing bankruptcy that you can try today!

Realistically look at your debt

Often times, many people are so anxious about their debt that they neglect to actually look at their credit reports. Surprisingly, lots of these same people would realize that their debt is manageable if they would just take the time to acknowledge it. Once you get a general idea of how much you owe, consider options such as debt consolidation or settling. Debt collection agencies will often settle for much less than what is owed in order to eliminate the account.

Find a reputable credit counselor

In the event that your credit is in pretty bad shape, a good course of action is getting in contact with a credit counselor. Don’t shy away from a consultation because you might assume that your credit is too far gone to mend. A credit counselor will be able to provide a solid plan for repayment of your debts as if you were in the process of bankruptcy, without actually needing to file.

Refinance your mortgage

Mortgages are often one of the many reasons that people can’t bring their heads above water when they’re swimming in debt. However, refinancing a mortgage can be effective enough to provide elbow room for making debt payments each month. Talk with your lender about the possibility of restructuring your mortgage so that you have a lower payment each month with better interest rates.

Sell your property

This one might make you a bit nervous, but the benefits are absolutely worth it. In the event of bankruptcy, a trustee usually visits the property of the debtor to evaluate the value of all assets in order to settle the claim. You can easily avoid this scenario by selling your property and steering clear of bankruptcy altogether. If you’re considering the thought of bankruptcy, think about your assets instead. Consider things that you could live without if you had to. For example, second cars, antique collections, and other items might be suitable candidates for sacrifice.

Make effective sacrifices

Climbing out of debt takes hard work and dedication. You aren’t going to see change if you merely slash a magazine subscription from your budget. Getting out of debt means making real sacrifices such as foregoing takeout meals, cancelling the gym membership, or reducing your auto insurance from full coverage to liability. Once you can learn to make substantial sacrifices, a world of possibilities will open up for moving past your debt.