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Alternatives before filing for a Bankruptcy

Tens of thousands of people in today's America are finding themselves with dramatically less family income, seemingly insurmountable mountains of debt, and their homes being worth a fraction of what they owe on them. Fearing lawsuits and seeing no other escape hundreds of people are filing bankruptcy. What are the other options?.

Bankruptcy is and always has been the last option one should consider. All other options should be exhausted before one walks into a federal courtroom to file.

Housing issues are becoming much more solvable in today's America. Lenders are often very willing to "modify" loans to a lower interest rate and/or principal rather than have another foreclosure on their books. Hundreds of for-profit and non-profit agencies exist to assist people with their mortgage issues. One should attempt to work with the bank themselves or using a third party agency before deciding to "walk away" from their home. There are very few cases in which losing a house should lead to a bankruptcy.

For debts where consumers can barely or not even make the minimum payments anymore the first step is to try to work with your creditors. They may be willing to similarly modify the terms of the debts, especially for credit cards. Deferrals are another option some may offer. Ironically the trend recently seems to be that creditors are less willing to work with their clients directly.

Consumer credit counseling likely will not help you if you are in deep hardship. Consumer credit counseling helps reduce rates but often has minimum payment requirements very similar to the normal requirements. As such the monthly savings are not enough to help clients to get ahead. It is worth getting a free quote first however simply to explore all possibilities.

The remaining option for debts is debt settlement. This process can be attempted to do it oneself but one should be well aware of the pitfalls of taking this route. Be sure to do your research beforehand. Debt settlement programs also exist and many of them provide a valuable service to those with only bankruptcy as a remaining option.

Debt settlement, unlike all other options, dramatically reduces the principal owed by settling for less that the full balance. The program can take a few years (as does consumer credit counseling) but the savings are typically very dramatic. The term and pay plans are set up as to favor the client's individual situation and availability of funds unlike any other options. As such debt settlement can be an affordable compromise for those who are struggling to stay afloat.

Before filing bankruptcy one should fully investigate all options out there for their situation. Those struggling in today's America should realize that there are thousands of others in the exact same situation as they are and there is often relief out there if they only go looking for it .

About the Author:

Bankruptcy Alternatives a blog which enables you to explore all possible ways to Avoid Bankruptcy. Discuss and help others Avoid Bankruptcy. www.mybankruptcyalternatives.com/

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