Debt Relief Options: Alternatives to Bankruptcy

Filing bankruptcy is not the only way to put off payment of your debts. There are many alternatives to bankruptcy that will not affect your credit standing, career options, and ownership of assets. Here they are:

1. Negotiating With Creditors

Calling your creditors and being honest with them about your financial constraints is your first alternative to filing bankruptcy. Your debtors will help you come up with a prepayment scheme that will be agreeable to them and easier for you to meet. If you cannot negotiate with creditors on your own, you can seek the help of non-profit organizations that offer credit counseling services.

2. Refinancing Loans

Before defaulting on your mortgage and debt payments, you should start applying for loan refinancing. This is especially true if you think that you will be losing your job or you expect to be in a financial difficulty soon. Doing so, you can even secure better rates and terms than your previous mortgages or debts.

3. Collection Proof Status

If you are facing credit card or unsecured debts that you cannot pay because you do not have enough money, income, or assets to pay them, then you can consider doing nothing at all. If your creditors find out about your situation, they will consider you as collection or judgment proof and just write off your debts. However, once your situation improves and you already have work, you are no longer considered as collection proof.