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Reasons Why Filing For Bankruptcy Is Better Than Settling Debt Using Bankruptcy Alternatives

Being under considerable debt can be a very stressful experience for you. There are times where you might find yourself in a situation where you don’t have the income to pay your debts, and neither do you have non-exempt assets that can be sold off to settle part of your debt. And in such circumstances, we advise that you consult bankruptcy attorneys in Mesa.
With several bankruptcy substitutes that you can use to settle your debt, filing for bankruptcy might seem like overkill for you. However, before you make your final decision, let’s explore the different options you have.

What Bankruptcy Substitutes Are Available

1. Negotiate With Your Creditors For A Debt Settlement Deal

If you don’t want to file for bankruptcy, the only option for you is to settle your debt. When you’re buried under a mountain of student loans, credit card debt, personal loans, mortgages, car loans, etc., you might find yourself prioritizing paying one creditor over the other. In extreme cases, you might even find it difficult to pay back one creditor.
So, rather than defaulting on your debt, you could negotiate with your creditors to change your repayment terms. You could work out a deal that takes into consideration your financial situation. However, be prepared that your creditor may refuse to negotiate with you. They know they have legal options they can pursue to get you to pay them as much as you can. For some creditors, they’d rather recover what they can rather than bet on an unknown future.

2. Consider Debt Consolidation

Debt consolidation provides you with the option to consolidate your consumer debt and liabilities into a single debt and take out one single loan to pay it all off. So, if you have credit card debt, student loans, and any other liability, you can borrow from your bank or credit union and ask them to help you pay off your current debts.
While debt consolidation doesn’t clear your debt, it helps you reduce the number of creditors you’ll deal with and improves your repayment terms and schedule. However, you should be aware that your chances of being provided with a debt consolidation plan depend on whether your lender can trust you to pay on time. There is also the issue of securing these loans. Most lenders require that borrowers secure these loans with assets such as your home.

3. Selling Your Assets

Most people under immense pressure to pay off their debts end up selling some if not all of their assets. Some end up paying off their debts completely. In contrast, a good number of people end up only paying off a portion of their debt.
Selling your assets and paying off a certain portion of your debt can help you negotiate a better debt repayment structure. And you can also buy yourself more time which you can use to come up with a better plan of how you’ll manage to pay off the remaining debt.

4. Enrolling With A Credit Counselling Agency

Even before you file for bankruptcy, you will be required to first work with a credit counseling agency. The main role of credit counseling agencies is to help debtors negotiate with their creditors for a more suitable loan repayment deal. Many financial experts will advise you to contact a credit counseling agency, especially if your negotiation skills aren’t good. And that’s because credit counselors can help negotiate for you lower repayment terms and lower interest rates.
The second role of credit counseling agencies is to help you create a debt management plan meant to help you come up with a payment plan you can afford.

Why Is Bankruptcy Better Than The Above Bankruptcy Alternatives

At first, it might not seem like it, but filing for bankruptcy is a better alternative for you than exploring the above bankruptcy alternatives. When you decide to deal with some of the bankruptcy alternatives available to you, you will have to rely on the goodwill of your creditors.
However, be honest with yourself. Are you 100% sure that your creditor will prioritize your needs over their needs? The answer is a simple no. At the end of the day, your creditor is running a for-profit business. In cases where your ability to pay off your debt is significantly diminished, they may decide to recover what they can. Your creditors may request a court order to auction off some of your assets, further worsening your financial situation.
Secondly, the above bankruptcy alternatives require you to pay back your debt. Their role is to increase the loan repayment period and lower your interest rates. If your financial situation doesn’t improve or worsens even further, you might not be able to pay off your debt. Your creditors will start pursuing you relentlessly to recover their money back. And under intense pressure and stress, your mental and physical health could worsen, which would further impact your financial situation.

What Next?

Therefore, to avoid such situations, the best option for you is to file for bankruptcy. While filing for bankruptcy does significantly reduce your credit score rating, it offers you protection from your creditors. It reduces your ability to take a loan or own a credit card. In any case, this might be the best for you since the last thing you need in your situation is to accumulate more debt.
As a trade-off for reduced access to loans and credit, your legal obligation to pay back your creditors is relieved. And depending on the type of bankruptcy petition you’ve filed for, you can still keep your home and maintain your business. Most importantly, you will have the room to refresh and develop a new plan to improve your earning ability and finances. On top of that, your mental and physical health will improve, improving your ability to function financially.
To file for bankruptcy, you’ll need a good bankruptcy lawyer who will help you analyze your finances and advise you on which bankruptcy option will yield the most benefits for you. If you still have questions or want to know more about filing for bankruptcy, visit our website via this link

Arizona Bankruptcy and Debt Solutions
1013 S Stapley Dr
Mesa AZ 85204

Do You Qualify for Bankruptcy?

Filing for bankruptcy isn’t the right solution for everyone. The determination of whether or not bankruptcy is an appropriate debt relief solution for your will be made based on a number of factors including the type and total level of your debt. Use this form to schedule an appointment with one of our bankruptcy attorneys. The consultation is completely free and there is no obligation.