Spiraling Debt? Here Are Some Options

Spiraling Debt? Here Are Some Options

Some people may think, “Do I really need to declare bankruptcy in order to escape my dire financial situation? After all, aren’t there other alternatives to choose from?” This type of attitude isn’t uncommon.

However — contradictory to popular belief — bankruptcy isn’t a bad word. In my many years of experience advising clients, I’ve actually found it to be an effective way of managing financial hardship, yet a healthy dose of skepticism and / or outright doubt is forgivable.

However, once we’ve shed more light on the bankruptcy process, it may be easier to let these aforementioned attitudes go. So, in the spirit of meting out sound financial advice, we compare the bankruptcy process to its other available alternatives below.

Bankruptcy vs. Alternative Options

 

Scenario 1: Debt Settlement / Negotiation

Are you thinking that debt settlement / negotiation with creditors (an alternative to bankruptcy) is the solution to your seemingly insurmountable debts?

While it is possible to work with creditors (and even debt collectors) in order to try and make your financial situation more manageable, you’re relying on your negotiating skills. The problem here is that creditors may or may not lower the total debt owed to them i.e. there are no guarantees.  

Even worse is how debt negotiation, settlement, consolidation, or elimination companies who offer to “help” might actually be trying to scam you.

Remember, even if you’re an excellent negotiator and / or you give creditors (or a debt relief agency) a lump sum of money up front, you may still end up making things worse on yourself thanks to the steep fees and unkept promises of the other party.

 

Scenario 2: Borrowing Money From Relatives

While it makes sense to ask help of relatives or friends who are more financially well off, this approach comes with its own set of complications.  

For instance, will you be able to pay back those closest to you in time? How do you decide on an interest rate? Will there be any lingering resentment on either side?

Yes, mixing business with one’s personal life always comes with the possibility of damaging your closest relationships.  

So, while I wouldn’t advise you to overlook this money-borrowing approach, I do encourage you to consider the possible long-term, unintended consequences.  

 

Scenario 3: Ignoring Your Debt

Under the stress caused by your debts, you may simply decide to ignore your creditors for as long as possible. Of course, this approach comes with its own perilous consequences.

If your debt is secured (i.e. collateral was used to guarantee it) assets such as your home or vehicle will simply be seized by creditors. On the other hand, if your debt is unsecured (i.e. not tied to a particular piece of property) you are likely to be sued in court for your wages and/ or property as forms of repayment.

Clearly, ignoring creditors in order to buy yourself more time or brainstorm a plan of action is unproductive— and even worse, it’s hazardous to your future financial health!

 

Obtain a Bankruptcy Consultation Today

Rather than attempting to take debt relief into your own hands via dubious alternatives, it’s best to explore your bankruptcy-declaring options. For a consultation, call me at 562-498-3395 today.

Sources:

http://www.nolo.com/legal-encyclopedia/bankruptcy-alternatives-30011.html

http://www.nolo.com/legal-encyclopedia/dealing-with-debt-overview-of-32213.html

2018-12-19T12:43:37-08:00