Bankruptcy is Not Your Only Option
One choice is to try a debt workout. A debt workout is where a debt management company negotiates a settlement between a debtor and, say, a credit card company to where the debtor will only owe a fraction of the original debt. Most credit card debt accounts settle in a range of 30 to 50%. These companies are willing to do this if you seem to be a good candidate for bankruptcy. Since they know that they would receive nothing in those cases, credit card companies see it in their best interest to negotiate debt workouts.
Another option is taking a debt consolidation loan. These loans are structured as a secondary mortgage on your primary home, and usually render $5,000-$15,000 to their borrowers. For a lot of people, this extra loan may be the perfect solution, but there are some things to be wary of. Keep in mind that debt consolidation loans will most likely lead to a higher interest rate and a longer duration of payments. However, people with excellent credit are able to get a LTV (Loan to Value) of 125%, meaning that they can borrow up to 25% beyond the value of their home. Unfortunately, these LTV’s come with a pretty high interest rate.
A further option is debt negotiation. This is different than the previous two by which a consumer retains the services of a specialist to represent them in negotiations with that individual’s creditors. By going through these specialists, you receive protection from sneaky practices of debt collectors. Also, your debt is reduced to a more manageable amount, therefore reducing the amount of your monthly payments as well.
Lastly, try asking for a loan modification. Simply explaining your situation to your bank may be enough for them to establish are more manageable payment plan on your behalf.
Whatever you choose, make sure to do your research beforehand and pick a company that you can trust to help you avoid bankruptcy. And remember, it never hurts to call multiple places for advice. The more the merrier.
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For more information about Avoid Bankruptcy and Debt Elimination. Please visit: www.shorelinedebtsolutions.com/ (Published: May 2009 – Image: www.nurido.at)
