Options to Avoid Bankruptcy - The Bills.com Blog
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Options to Avoid Bankruptcy
Question: I am unemployed and unable to make credit card payments on time an the interest rates r increasing. Plus, these delinquencies are now showing up on my credit reports. How can I improve my situation aside from bankruptcy?
Answer: The good news is that there are many options out there to help you avoid bankruptcy. You have several possible options to help you improve your financial outlook, but Ithink the best strategy would be to get an honest and free consultation from a debt consultant to help you evaluate your alternatives in detail.
Very quickly, if you want a free debt consultation with one of Bill's approved debt help partners, click here: http://www.bills.com/debthelp/debt/
If you own a home, a secured debt consolidation loan may be right for you. This type of loan is essentially a home equity loan which is used to pay off your other creditors. Secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate and payment amount. However, be careful before you borrow money against your home to pay off credit cards and unsecured loans; you are converting what was previously unsecured debt into secured debt. This could cause you problems down the road if for some reason you are unable to make your payments, or if life circumstances force you to file bankruptcy, as you may not be able to discharge the secured debt as you would unsecured debt. However, secured debt consolidation loans work for many people, so this is an option to consider carefully–the Bills.com Savings Center is a great resource to help you find a lender for this type of loan.
Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at: http://www.bills.com/mortage/refinance/
Another option to
consider is a Consumer Credit Counseling Service, or CCCS. CCCS companies offer numerous services, such as financial counseling and budget planning, as well as Debt Management Plans (DMPs). In a DMP, the CCCS would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. You would then make a single monthly payment to the CCCS which would distribute the funds to your creditors, based on the new payment amounts. There are several drawbacks to CCCS, though. First, depending on your creditors, it may not be able to reduce your monthly payments enough to improve your financial situation. Second, it may have a negative impact on your ability to obtain a loan, so you may not wish to enter into a DMP if you anticipate any large purchases, such as home or an auto, in the near future. Third, the average DMP takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan.
You may also want to consider the services offered by debt settlement firms. Rather than making monthly payments to your creditors, these programs negotiate lump sum settlements with your creditors, frequently reducing your debts by 50% to 60% of your principal balances. These programs usually take only 2-3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. In many cases they can also reduce your monthly payment toward your debt. There is one major drawback to debt settlement programs, though–they will significantly damage
your credit while in the program and for at least a year or two afterwards. However, if you are currently unable to afford to pay your creditors, the hit to your credit may be worth the benefit of ridding yourself of credit card debt.
You can also speak with a qualified bankruptcy attorney to discuss the relief available to you in bankruptcy. You can search for a American Bankrupcy Institute certified attorney in your area by visiting the ABI’s website at http://www.abcworld.org/condir.html
Consulting with an attorney does not mean you are going to file bankruptcy, but it will help you better understand the options available to you in case other solutions I mentioned above do not work out. For more information about bankruptcy, I invite you to visit the Bills.com Bankruptcy Information page at http://www.bills.com/bankruptcy/
An qualified bankruptcy attorney should also be able to carefully analyze each aspect of your financial situation to advise what non-bankruptcy solutions may help you.
Depending on your income and amount of debt, one of the several options I have described above may be able to help you. I encourage you to explore the Bills.com website, http://www.bills.com/debthelp/ to read more about these and other options available to you.
I hope this information helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Delois on Tuesday 18th September 2007 09:56
I am currently behind on my mortage and I am unemployed.I have no one to help me and I will go into foreclosure on the 27th of September.
2. Posted by Nithin on Thursday 20th September 2007 16:57
The only way to determine whether or not you will qualify for a refinance loan is to apply for a loan with several different lenders and/or brokers. Not only will these mortgage professionals be able to tell you whether or not you currently qualify, but if you do not qualify, they can tell you what aspects of your financial situation are causing you problems, and make suggestions about how to improve your chances to qualify for a loan. They may also be able to direct you to other available resources available to assist you in saving your home. If you would like to read more about mortgage refinance loans, I encourage you to visit the Bills.com Home Refinance Resources page at http://www.bills.com/home-refinance If you enter your contact information in the Bills.com Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the loan options available to you. If you find that you do not qualify for a conventional refinance loan, you may want to consider selling your home. While I know that selling the home may be an unpleasant thought, selling the home on your own terms is certainly preferable to the possibility of losing the equity you have worked to build in foreclosure proceedings. If you think that selling your home may be the best course of action to take, you should speak to a real estate broker to determine the current prices in your neighborhood and whether or not selling your home is a wise decision under current market conditions. While I encourage you to explore your options regarding refinance and the possible sale of your home, you should also contact your current mortgage company to discuss any assistance they can offer you with your mortgage payments. Many mortgage lenders will assist borrowers, especially those with extreme financial hardships such as yours, with bringing their loans current.