Bankruptcy is a social stigma that is best avoided by the people of America. It is the last option people resort to. Everything has its pros and cons, but bankruptcy has more negatives than positives. The procedure involves you to make a public declaration that you are not able to handle your own finances. Also, you need to declare all your possessed assets and the bankruptcy courts take up from there with the supporting documents. Bankruptcy instigates a permanent damage to your credit report and the record remains for atleast seven years. Together with this the costs of fighting a legal battle are huge and the appropriate Chapter of bankruptcy that will pardon off most of your debts is hard to qualify for. People are lured in by the attractive loan rates and thus forget to maintain the balance between the monthly income and expenditure.
What are various reasons to find alternatives to bankruptcy?Well, loss of assets after filing the suit is the main cause for people to look for greener pastures. Your fate is decided by the magistrate who passes the judgement on the basis of the information received by the Official Receiver. The stains of a previous suit filed won't allow you to get fresh loans and start a new life. The effects of bankruptcy can also be found on your personal as well as professional life. Even your social life gets affected. All these reasons are enough for you to try out some alternatives available to bankruptcy, so that you can make both ends meet.
There are various possible alternatives available which you should consider before filing bankruptcy. They are discussed below.
Counselling of your Credit:If you are on the look-out for an alternative, then you should consider Consumer Credit Counseling Service (CCCS), which is a specific type of debt management plan. Under this program, you have to make a payment to the CCCS firm, which in turn distributes the payments to your enlisted creditors. The main function of this firm is that it negotiates for lower rate of interests with the creditors. This in turn reduces your payments and adds more to the principal balance. For people paying a high interest rate this is a sure shot bet. The entire process of becoming debt-free is hastened. A CCCS program entitles you to pay 100% of your debts, plus the interest. The burden is not entirely removed, but the responsibility has just shifted. You are required to make a timely monthly payment. So, choose the correct option before proceeding. The statistics support the trend of people dropping out before completing the entire program. An average program might take upto five years. Although the program does not have a negative impact on your credit score, it is included in it and affects your credit rating during the tenure of your program enrollment. A bankruptcy lawyer practising in California will provide assistance to all your queries.
Settlement of Debts:Debt negotiation is a form of debt consolidation process that reduces the total amount of debt. You can end up saving as much as 50% and your monthly payments will also get reduced. This program is brought into practice for people who face difficulties while paying their regular bills or start lagging behind. The average time taken for debt settlement to complete is three years. The entire tenure though does not require you to pay your creditors. This can have an adverse effect on your credit rating during the entire term. To avail a fast and cheap way to get rid of all the debts you can give it a shot. If you are trying to avoid Chapter 7 bankruptcy, then this process offers you a low monthly payment. A consumer debt consolidation attorney will take care of all the formalities on your behalf.
Assets Liquidation:This is a great option to consider if you want to settle and clear out all your debts. Before going ahead, you should make a check for the tax implications for liquidating that asset. Also, you should enquire whether or not the court will hold that asset against you, if after all you file a bankruptcy suit. For example, you should not go about liquidating your retirement accounts as they are discharged if you file for a suit later on. Also, you would incur taxes and penalties by drawing them earlier than the term, plus you have to still end up paying the entire debt. Even equity in cars or property are exempt from collection by creditors if you have filed for bankruptcy. A debt consolidation attorney in California will bail you out with all the legalities involved.
Debt Consolidation Loan:Theoretically, this is considered a good alternative, but in practice things are different. Many people are of the opinion that bankruptcy does not give you access to have enough equity to borrow against or does not have enough credit to access the equity, if it ever exists. For example, having an equity in a home will be effective in refinancing your mortgage to pay the debts, before you lag behind. Loans have become tough to get by, as there has been a tremendous change in the lending requirements. The lenders take into knowledge the debt-to-income ratio before dispatching any loan.
The above-mentioned procedures are some of the best practices which can be followed by people as alternatives to filing bankruptcy. There are many more methods available. To get a detailed insight you should contact an attorney to satisfy all your problems.This post is shared by Attorneyforbankruptcy.com, which a leading law firm of California. Here you can have detailed information on california chapter 13 bankruptcy attorney and consumer dept consolidation.
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