If you are under heavy debt and are seriously considering declaring bankruptcy to just end it all and call it quits, then you are surely going to regret it. Before you jump the gun, let me just tell you that there are many alternatives to declaring bankruptcy. In fact, if you just exert enough effort and time, then you will surely find the perfect alternative to handling your debt instead of going bankrupt. Furthermore, declaring bankruptcy is not just a poor solution to your debt, its consequences can affect your life in the future as well. You see, bankruptcy will forever show on your records and no matter where you go, people will always know that you once quit and walked out of a big challenge. And this will surely affect your livelihood should you pursue employment or start a new business. Fortunately though, as said above, there are many alternatives in getting out of huge debt instead of going bankrupt, below are 4 of them.
- Negotiate with your Creditors – Debt Restructure
First of all, when declaring bankruptcy, the bank or the government takes over all of your assets and administers the sale of them and the subsequent payment to your various unsecured and secured creditors. While this rids you the hassle and the heartache of dividing what is left of you to your creditors, it is actually a disadvantageous situation for your creditors. In most bankruptcy cases, the creditors get less of what they expect from you even if they know that you are suffering financially.
From this fact alone, we can learn that creditors will be always open to discussion and negotiation about your debt especially if you are on the brink of declaring bankruptcy. Therefore, approach your creditors and sit down with them to discuss if you can restructure the terms of your debt. You can ask for a grace period or lowered interest rates or principal amount. Whatever it is, creditors will always agree to the situation where they can get more. And a bankrupt debtor will always have less for the creditors.
- IVA Help and Advice
You can also opt for IVA or Individual Voluntary Arrangement instead of bankruptcy. An Individual Voluntary Arrangement is an agreement or contract between you and your creditors, which is administered and supervised by a licensed Insolvency Practitioner which gives you the chance to pay your creditors at an agreed monthly payment which is reasonable to you. The contract usually lasts for five years, and upon its end, the remaining balance and interests are formally waived off. IVA contracts are legally binding, thus, upon entering the agreement, the creditors won’t be able to act against you. If you are interested, then quickly search for the nearest IVA Help & Advice company. The faster you act, the better agreement you can get.
- Debt Consolidation
Another alternative that is better than declaring bankruptcy is by actually incurring another debt. Though it may sound scary, consolidating all of your debts into one loan might just be the best solution for you. Not only will you be able to pass all of your debts to a single entity, you will also have lesser worries as you will only deal with a single creditor instead of the many creditors you have.
If you want to consolidate all of your debts into one loan, then government affiliated banks are the best for you as they can sometimes have programs that can help improve your financial situation.
- Sell your Unsecured Assets
If you still have many unsecured assets, then it might also be a better choice to sell them yourselves and divide them among the unsecured creditors. By doing the sale yourself, you are giving yourself the chance of possibly earning more from the sale of the assets. Who knows? You might just solve your debt crisis from amazing sales and prevent declaring bankruptcy.