When you get so far into debt that you need help getting out of trouble, bankruptcy becomes a viable option. However, the impact on your credit and the drastic nature of how bankruptcy works is a method of last resort. You should explore alternatives to bankruptcy before jumping straight to bankruptcy as a way to make sure that you are taking the appropriate steps.
At Kain + Henehan, we work with clients who need help with bankruptcy. Many of those clients have either tried other options or are recommended other options before starting the bankruptcy process. Here are several alternatives to bankruptcy recommendations from a Saint Cloud bankruptcy attorney.
Debt Consolidation
Debt consolidation is a method of bringing debt from many different creditors into one lump debt held by one creditor. There are several ways to do this. One option is to find a company that will give you a loan big enough to pay off all of your other creditors. That way, you only owe money to the one creditor for the loan.
The key to consolidating your credit through a personal loan is risky because of the size of the loan and the payment terms. Make sure that you can handle the payments, and the terms make the payment amount predictable over the long term. That way, you don’t end up owing more money in the long run.
Another option is to work with a debt consolidation company. These companies negotiate with creditors to reduce your debt and pay it off so that you owe less money and only to a single creditor. Again, it is important to make sure that the terms of the agreement work in your favor or you could end up in a rough spot.
Self-Renegotiation With Creditors
If you don’t want to work with a credit consolidation company or take out another loan, then you can try to renegotiate your debts yourself. This is risky because the creditors are under no obligation to help you with this. However, many creditors want to avoid the legal process of filing lawsuits or hassling you for money. They may be willing to negotiate with you to avoid a difficult recovery process.
When you do try to renegotiate, there are several things that you can ask for:
- Payment pause: a temporary stop to making payments to help you get back on the right financial foot.
- Payment term changes: a change in the amount that you pay every month or when the payments are due, which can fit into your finances more easily.
- Overall debt reduction: Reducing the overall amount that you owe so that you can pay it back. This is the most drastic renegotiation, but it can also affect how much you pay overall and the amount of your payments.
Remember, renegotiating your debt is a long shot, but it is worth trying in many cases. Companies can save money by working with you rather than chasing you for that money, so they may be willing to help you. The worst they can do is say no, and nothing else changes going forward.
Discuss Your Options With a Saint Cloud Bankruptcy Attorney
If you have reached the point where bankruptcy seems like a good idea, then it is time to discuss your options, including alternatives to bankruptcy, with a bankruptcy attorney. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form to schedule a consultation.
