Filing for bankruptcy is an option if you are in a lot of debt you cannot handle. However, there are other options that you can try first. Not everyone can qualify for bankruptcy under Minnesota law; others may want to avoid it at all costs. Here are a few options for debt relief without bankruptcy in Saint Cloud, Minnesota.
The Key To Debt Management Programs
The key to bankruptcy is that it finds a way for you to pay as much of your debt as possible and discharges what you cannot. In a way, it limits how much you have to pay to a manageable amount. You do not need bankruptcy to do this. Any program that brings your debt payments down to an amount that you can manage can potentially help you get out of debt. Look for programs or methods that reduce your monthly or total payments to an amount you can sustain for a long time, allowing you to pay off debt and satisfy your creditors.
Debt Settlement Negotiations
The first step that you should take is to try to negotiate your debts with your creditors. For example, you have a car loan of $1,000 per month but can only afford $500 per month. You may be able to negotiate a lower payment with your creditor in exchange for extending the length of the loan or something else of value. It could be a win-win situation as the creditor can still collect the total amount owed to them, and you don’t have to file bankruptcy because of that debt.
Some creditors are willing to renegotiate their contracts with you to make it more manageable. However, some creditors are unwilling to negotiate, and some may try to trick you by adding additional stipulations to the revised contract. Work with a qualified attorney to review your debts and manage negotiations so that you don’t end up in a worse position than before.
Debt Consolidation Loans
People file bankruptcy not because the total sum of their debt is too high but because they can’t afford to pay their debts according to the terms that they agreed to. Think of it this way: you can have $1 million in debt and not go bankrupt if you only have to pay it back in installments of $100 per month. If, instead, you had to pay it back at $100 per day (approximately $3,000 per month in debt payments), you may have a much tougher time paying under those terms.
If you can change the repayment terms to something you can handle, you can avoid bankruptcy. Rather than negotiating with all of your creditors, you can consolidate that debt into fewer creditors. It’s even possible to consolidate all of your debt to one creditor who will give you terms you can handle.
This is how a debt consolidation loan works. A single creditor gives you a loan big enough to cover your debts to other creditors. You use that loan to pay everyone else off, then make payments to the single creditor that you have left. It’s an effective way to manage debt, even if your other creditors won’t negotiate.
Ask an Attorney For Debt Relief Guidance
While bankruptcy is an effective way to correct your finances, it is not the only way. In fact, it is usually considered an option of last resort. If you are struggling with crushing debt and need a way to fix your finances, ask an attorney for debt relief guidance. At Kain + Henehan, we have extensive experience with bankruptcy filings. We can help you find the best alternative if bankruptcy is not your best option. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form to discuss your case during a free consultation
