Are you having financial difficulties and thinking about filing bankruptcy? If so, it is best to identify all your possible options first and understand the advantages and disadvantages of each. When you learn about your alternatives, you can then make an informed choice. A debt consolidation attorney from Salt Lake City cites the following options you can consider.
This is a viable option for debtors and creditors because instead of defaulting on the loan, both sides can agree on an amount and the payment terms. A creditor is amenable to taking this route when a debtor has no choice but to declare bankruptcy. For creditors, a debtor requesting for a repayment plan is a much better option than a debtor filing for Chapter 7 bankruptcy since this means that the debt will be discharged.
Here, the debtor and creditor negotiate and agree on a reduced monthly due, lower interest rate or a longer and staggered payment term. Creditors consent to this when there is no other option for the debtor.
This alternative consolidates what you owe into one payment to one creditor. This route makes it easier for a debtor to pay since you only need to take care of one payment to just one creditor. If you choose this option, you have a couple of choices on how you can go about it.
For one, you can opt for a home equity line to consolidate debt into one with lower interest or possibly a tax-deductible one. However, if you end up defaulting on your equity line, a creditor can take your house as collateral and therefore, take possession of your property.
Another option is to transfer the loan to a credit card that has a lower interest rate. You can negotiate a reduced rate until you pay the debt in full. Here, you will end up paying lower interest over the term of the payment.
Your third choice is to negotiate a consolidation of all your separate debts into one. This option means you only pay one creditor at a reduced interest rate. You still owe the same amount, but you get to enjoy a lower interest rate and monthly due compared to having to handle separate payments to different creditors.
Debt Management Plan
If you fail to find a compromise with your creditors, you can hire a credit counseling agency to offer you some relief and negotiate a debt management plan on your behalf. In such an arrangement, you pay the agency an agreed upon amount, and they will pay your creditors until full repayment of your debt. The agency will create a realistic debt repayment plan based on the amount of your income and debts.
These are your options when you are having problems paying your debts. Consider these and the pros and cons of each alternative before you make a final decision. And soon, you will finally see yourself able to take control of your overwhelming debts and back on the right track.