What are the alternatives to Bankruptcy?
Contact Your Creditors Explain why you cannot make your payments and suggest an arrangement that could work for both of you. You may be surprised that many creditors are more than willing to co-operate. Consolidation Loan You can approach a bank or financial institution about combining or “consolidating” your debts into one loan. This creditor pays off all your debts and, in return, you make a monthly payment to that creditor. Make sure you shop around – interest rates vary. Avoid further credit purchases; this could make your debt load too great for you to handle. Credit Counselling Credit counselors will contact your creditors and attempt to work out a repayment plan that is satisfactory to both you and your creditors. In some cases they can work with you and your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money
Alternatives to bankruptcy include: • Trying to negotiate with creditors to reduce monthly payments or to skip some payments. • Getting help from a nonprofit credit counseling group. • What are the Consequences of filing Bankruptcy? A debtor may not be fired from a job because of filing for bankruptcy. However, creditors may take a past bankruptcy into consideration when deciding whether to extend credit. Many creditors regard a person who has filed for bankruptcy to be a higher credit risk and may either refuse to extend credit or only extend credit on less favorable terms. Bankruptcy filings remain on a consumer’s credit report for seven to 10 years. It usually takes at least three years to reestablish your credit rating. • Do I need an attorney? While it is possible to file a bankruptcy case pro se, i.e., without the assistance of an attorney, it may be difficult to do so successfully. It is recommended that a person considering bankruptcy consult with a competent attorney prior to
