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Alternatives to Bankruptcy

Alternatives to Bankruptcy
"In the current economic climate, a large number of individuals are dealing with job loss, difficulty finding a new job, and underwater mortgages. A poor economy can also have a direct correlation with marital tension, leading to an increase in divorces and financial problems.

As a result of unemployment, foreclosure, and divorce, millions of Americans are experiencing severe financial distress. These types of problems lead individuals to contemplate declaring bankruptcy. Even those who do not suffer from any of the aforementioned conditions can be burdened with medical expenses that cause a great deal of tension.

A car accident or a life-threatening illness such as cancer can cost hundreds of thousands of dollars, if not more. If the injured or ill person does not have insurance, these costs will be even higher. A family member's severe illness can wreak havoc on their finances. These families may exhaust their 401(k)s, have their breadwinners forced out of the workforce due to injury or illness, or be forced to care for an injured or unwell spouse or child. All of these factors can make it impossible for family members to pay their medical expenditures, let alone their daily expenses. This circumstance can be extremely frustrating, leaving families frantic for a reasonable resolution.

When individuals are unable to meet their monthly or daily living expenses, they should consider all of their debt relief options. Some individuals may not qualify for Chapter 7 bankruptcy (debt liquidation), while others may qualify for Chapter 13 bankruptcy (debt reorganization). Some individuals may desire to avoid declaring bankruptcy and, as such, may wish to investigate their alternatives to bankruptcy.

Before making an official decision, individuals must consider the pros and cons of bankruptcy. Debt consolidation is a possible alternative to insolvency. With debt consolidation, the debtor obtains a single sizable loan to repay all smaller loans. Typically, the larger loan carries a lower interest rate; consequently, the debtor pays less over time.

Debt settlement is an additional option to bankruptcy. A bankruptcy attorney contacts your creditors and negotiates for smaller balances and/or reduced interest rates as part of debt settlement. The objective is for the attorney to negotiate a settlement that reduces your debt, thereby making payments more manageable.

When assisting a debtor, a bankruptcy attorney may also use loan modification. With loan modification, your mortgage's terms and conditions are modified to reduce your monthly payments and make them more manageable.

The concept underlying both loan modification and debt settlement is that creditors prefer to receive something from the debtor as opposed to nothing, which is what would happen to some creditors (specifically unsecured creditors) if the debtor filed for bankruptcy.

Contact a bankruptcy attorney as soon as possible if you are currently struggling with unmanageable debt and would like to learn more about your debt relief options from a qualified attorney. They may be able to assist you in regaining financial control so that you can confront a brighter future through bankruptcy alternatives.""

" - https://www.affordablecebu.com/
 

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"Alternatives to Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 195 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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