Alternatives to Bankruptcy

Filing for Bankruptcy is not anyone’s first option; it is typically a last resort for those in such dire need to rid them of debt. In an effort to avoid Bankruptcy you can look into other avenues such as:

Doing Nothing

Bankruptcy will keep your Creditors from garnishing your wages or taking your property. If you do not have a lot of assets to your name Creditors will not try to take them from you because it is not valuable to them. If you continue to ignore the situation you will continue to receive letters and phone calls from your Creditors requesting their money and offers ways to pay off the debts.

Ignoring these efforts to reach you is not in your best interest and is not advisable, however for those with no assets, no income or without a steady salary taking no action could be an option.

Self-Money Management

Debt is caused from spending more money than you have. In an effort to reduce it the most obvious answer is to not spend money you do not own. In reality that is just not possible. However you can control your finances by creating a budget and know what bills must be paid and when they need to be paid.

Listing out your expenses will give you an idea of where your money needs to go. You should concentrate on bills that are vital to living such as utilities and mortgage. In the instance that you do not pay your bills to people such as landlords and mortgages you risk being evicted or losing your home.

One of the areas you can reduce debt is in how often you go out to eat, drive your car, or even indulge in luxuries that are not necessary.

Negotiate with Creditors

Creditors are willing to negotiate with Debtors so as to avoid a Bankruptcy. During their negotiations they will try to obtain as much of their money as they can, whereas in a Bankruptcy they stand to lose all of their money.

Negotiating with your Creditors is only a good idea if you can afford the payments that you have set up with them. During these negotiations you can receive lower interest rates, reduced fines, and lower late fees and in some cases your late fees will be released all together. If you do not make your payments to your Creditors they may garnish your wages.

Do not ignore your Creditor, try to explain your situation and negotiate your payments.

Debt Restructuring

This process allows for a company to reduce their debts in order to retain the working order of their business. When this takes place outside of the courtroom it is called a workout. This process is a cost efficient means of continuing the business, where your primary costs will come from banks, Creditors, and taxes. During this process your debt will be reduced and our payments will be processed over a longer time period.

Debt Consolidation

Consolidating your debt involves borrowing money from a specific entity such as a bank or a Consolidation Company. You will make one monthly payment to them and they will in turn send payments to your Creditors. Consolidating your debt will help you to pay it off in one monthly installment while helping you to repair your credit score.

If you chose Debt Consolidation, pay extra attention to interest rates and the time span of your new loans; in the long run it could cost you more.

Formal Proposal to Creditors

If you cannot negotiate, reconstruct or consolidate your debt a proposal to your Creditors may be your only option. This process can take up to forty-five days after the draft of your proposal has been sent to your Creditors for approval.

Individual Voluntary Arrangement

In the United Kingdom an IVA is a formal agreement between you and your Creditors to pay off your debts. With the help of an Insolvency Practitioner you will set up a proposal to your Creditors and an agreement will be set upon.

Your arrangement will last at least five years at the end of which time your debt will be cleared and you will no longer be making any more payments for the unsecured debt included in your IVA application.

Administration Order

For people who owe less than £5,000 total in debt to more than two Creditors and hold at least one County Court judgment against you, you can obtain a court monitored arrangement to assist with your debt.

Consider one of this debt solution after understanding properly your financial and personal expenses. Any of these solutions as its own implications and costs. We suggest you to seek professional help and support in solving your debt difficulties.

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