Five Debt Relief Options to Avoid Filing Bankruptcy
Sometimes bankruptcy is necessary, but it can be a very stressful, life-altering event that many people equate to divorce, serious health conditions and even the passing of a loved one. While many Oklahoma citizens are candidates for bankruptcy, it is important to look at other options that may work for you to avoid filing for bankruptcy. In recent years, there have been more than one million bankruptcy filings per year in the United States. Sometimes people are too quick to turn to bankruptcy as the only option for debt management. But, if you find that filing a bankruptcy is right for you knowing that you have tried every option is sometimes soothing and helps you file your bankruptcy with less stress.
While there are certainly more than five ways to avoid bankruptcy, the five options described below have been effective for many people, and considering these options may help you get your debt under control and save your credit.
(1) Debt Management Programs Designed To Avoid
Filing Bankruptcy (DMPs)
You may have heard of debt management programs that give you the option of making one monthly payment to the debt agency, and the agency in turn makes payments to your creditors. This option can be very helpful for many people, but you should definitely do your homework first. Research the company to see if it is a for-profit or not-for-profit company. Does the agency issue you a loan to cover the cost of paying your debt, or do you pay a fee to the agency? There are many illegitimate agencies out there, but there are also some legitimate companies that will manage your debt for a low fee. Before enrolling in any Debt Reduction Program consider calling the Better Business Bureau and making sure they are who they say they are.
By making one monthly payment and paying a small monthly fee, you must close all of your credit card accounts, and in turn will get reduced interest rates, waivers of late fees, and the elimination of having to pay a variety of creditors every month. This program can also help you learn to spend without the need for credit cards.
(2) Consider Selling Real Estate and Personal Property To Avoid Filing Bankruptcy.
Selling your belongings can take a toll on you emotionally and leave you feeling like you have nothing. However, by selling real estate and personal property in order to pay off debt, you are giving yourself a clean slate. You can then plan to save money and eventually purchase a home again. You can start clean and learn to spend without the use of credit cards or the need to acquire personal loans. In the event that you have to file bankruptcy in remember that in both a chapter 7 and chapter 13 bankruptcy your primary residence is an exempt asset so you keep it.
3) Borrow Money from Family Members and Friends if Possible
Money, family and friends don’t always mix well. However, if you are in a time of desperate need, don’t be afraid to ask your family and friends for help. Instead of getting a loan from a bank and having to pay interest on the loan, you may be able to borrow from family and friends and come up with a reasonable monthly plan to repay what you borrowed.
(4)If You Can Qualify Refinance Your Home Loan
If selling your home is not an option for you, try refinancing your loan to get a lower interest rate and lower your monthly payments. This will substantially decrease the burden of trying to make ends meet and decide what debt takes priority over other debt. You may believe that you have no chance of lowering your interest rate upon refinancing, but this simply isn’t the case. Don’t hesitate to speak with your lender about this option as many lenders are willing to lower your monthly payments so that you are able to satisfy the terms of your mortgage. If you find that after you refinance your home you still need to file bankruptcy you can reaffirm this loan and continue making payments. Again, you keep your home even though you file a bankruptcy.
(5) If Possible Cut Back on Spending
We often do not realize how much we spend. Two dollars here, three dollars there. It all adds up. Instead of spending those few dollars at Starbucks, drink coffee at home. Instead of paying a gym membership, workout at home. Instead of going out to eat, cook at home. Take note of what you spend and you will be astounded at how much you can save by making small changes. Think about what you really need to survive, and what spending is really in the “want” category.
In order to determine what the best debt management plan is for you, contact EZ Oklahoma Bankruptcy Law Office today for a free bankruptcy law consultation. Our skilled bankruptcy attorneys in Tulsa can help you decide if bankruptcy is really the best option to get out from under a mountain of debt, or if there is a better option, such as those listed above. Call us today at (918) 637-1546, or fill out this online form. Our law office conveniently offers services in both English and Spanish.