When financial pressures start to mount, it can be difficult to keep up with payments. If your debt load is becoming too much to handle, it is important to look into alternative or non-bankruptcy financial solutions. Read on to learn why this type of solution might be the right choice for you.
1. Uncovering Non-Bankruptcy Solutions
When it comes to financial struggles, exploring bankruptcy as an option is at the forefront of many conversations. While this avenue is certainly a valid and appropriate method in many situations, it is not the only form of resolution. In this section, we’ll uncover non-bankruptcy solutions for getting you back on track.
Debt Consolidation: If you’re overwhelmed by high-interest credit card debt, debt consolidation may be the way to go. It involves taking out one loan at a stabilized interest rate that is used to pay back all existing debts. A single bill and payment per month makes it more manageable to whittle down a debt.
Work Out a Payment Plan: With some debtors, you may have the option to negotiate a payment plan. This gives you the opportunity to make lower payments over a longer period of time, while the original creditor is still paid back. Here’s how it works:
- Pick up the phone and speak to the creditor directly.
- Explain your financial difficulties and provide proof of your income.
- Request a lower payment or a longer period of time to pay back the debt.
- If the creditor agrees, make sure to get the details in writing.
2. Pros and Cons of Alternative Financial Solutions
Alternative financial solutions offer unique benefits to those who need financial assistance. Many of these solutions can provide quick funds in a short amount of time with flexible repayment options. However, they also come with some risks that should be considered when deciding to access them.
Pros:
- Often offer quick access to funds.
- More lenient qualification criteria.
- Flexible repayment options.
- Lower interest rates than credit cards.
Cons:
- Service fees may be higher than other alternatives.
- Not all services are equal, so know which one you’re using.
- May affect your credit score.
- Payments need to be managed.
3. Weighing the Costs and Benefits of Bankruptcy Alternatives
When considering bankruptcy alternatives, it’s important to weigh the costs and benefits of each option carefully. Making an informed decision is essential, so be sure to take the time to assess the pros and cons. Here are a few of the things you should consider:
- The cost of the alternative: What are the filing fees and other associated costs?
- The timeline: How long will it take to be completed?
- The effects on your credit: Will the alternative have a negative impact on your credit?
- The effects on your assets: Will the alternative protect all of your assets?
Once you have weighed the costs and benefits, you will be able to make an informed decision about which bankruptcy alternative is right for you. It may also be useful to speak to a financial advisor, as they may be able to provide further insight and advice on the best course of action.
4. Taking Steps Toward a Brighter Financial Future
Planning for a more secure financial future starts with taking healthful steps in the present. Many of these are grounded in the fundamentals of budgeting, creating an emergency fund, and researching products which can be of assistance. Here are some ways to begin:
- Create a budget: Start by tracking all of your expenses for at least a month, and determine what is essential and what can be trimmed. Once outlined, continue closely tracking your spending and savings.
- Look into tax-advantaged retirement accounts: If you are able to, take full advantage of these — they reduce your taxable income while also providing funds for your post-career years.
- Fund a rainy day fund: Aim to have at least three to six months of essential living expenses saved, which can provide a safety net in the case of a financial emergency.
- Increase your income streams: Look for job opportunities that may pay more, such as a weekend side job, or if you are self-employed, ways to bring in more clients and expand your business.
Additionally, consider researching financial products and services that can provide additional benefits. Look for materials that can help you pay off debt faster, for instance, or accumulate savings and watch them grow. Comparison shop to make sure you’re getting the best deal, and research what is necessary to qualify for certain products. Become empowered in understanding what is available, and make an empowered decision.
The goal of a non-bankruptcy financial solution, or bankruptcy alternative, is to provide a workable way to manage debt and rebuild your credit. Taking this step may be difficult, but it is an important one to consider if you’re facing financial troubles and hoping to avoid bankruptcy. Your bank or credit union as well as organizations such as the National Association of Consumer Bankruptcy Attorneys (NACBA) can provide help and guidance to get you back on financially stable ground.
