There are a number of bankruptcy alternatives available. The benefits of bankruptcy alternatives depend on the present financial condition of the debtor.
Bankruptcy is the last step to take to clear debts. A debtor should always look for the available bankruptcy alternatives to avoid the problems of a bankruptcy. There are a number of alternatives provided by the professional credit counseling firms.
The debtor can make a repayment plan and personally talk to the creditors. He can explain to creditors about his present financial situation and ask for a new repayment plan that will make it easier to pay debts. The deptor may also ask for lower interest rates and discounts on accumulated debts. If successful, it can be the most effective bankruptcy alternative.
There are a number of consumer credit counseling firms that offer bankruptcy alternatives. These firms charge a set percentage of the total debt for their services. A deptor can negotiate with the creditors and arrange for easier repayment plans with flexible terms and conditions. These firms also have a good business relationship with a number of creditors which makes it is easier to arrange bankruptcy alternatives.
Debt Consolidation Loans
Debt consolidation loans can also be considered as a bankruptcy alternative. These loans are provided by a number of financial institutions at lower interest rates.
A person can consolidate debts which are then re-paid through easy monthly installments. This option may save money for the debtor who is otherwise required to pay higher interest rates. At the same time, a debtor can sell any of his personal assets to clear the debts.
Chapter 13 is a bankruptcy chapter, but it provides the individual with the opportunity to pay all his debts through a financial plan that takes into consideration his monthly income.
Last Updated on : 10th July 2013