When you are considering bankruptcy, you may come across the term ‘Alternative Debt Resolution.’ Do you know what that means? Alternative debt resolution is when an outside, impartial person attempts to help resolve your debt with your creditors for you. This can happen in a variety of ways, and it is an option for some people, but may not work for everyone.
Steps to Successful Alternative Debt Resolution
This is not an option that many people want to consider because it means losing property. However, it can be of great assistance and may not hurt as much as you might think. Do you have an extra car that you could sell? What about bonds or stocks that have significant value? Liquidating some of your non-necessary assets can allow you to pay off your debts more quickly.
If you have debt that is severely delinquent, you may be able to use debt settlement to help. In a debt management plan, you pay the entire debt over a period of time, but with debt settlement, your creditor will forgive part of your debt and you pay the remaining balance. The clear advantage is a savings in cash, but there are disadvantages. Your credit report will show that the debt paid was less than the original amount, and there could also be tax penalties. An experienced attorney or tax professional can explain the impact that debt settlement can have on your income and taxes.
Debt Consolidation Loan
Some people struggle to pay multiple creditors and instead opt to eliminate that hassle by getting a debt consolidation loan. This will allow you to pay off all your creditors and only have one debt to pay. You can do this by taking out a home equity loan to pay off your unsecured creditors but understand that if you do not pay off your loan, you could find yourself evicted from your home because the loan will be secured by your home.
With any option you choose, you will have to make changes to your lifestyle. If you keep living the way you have been, things are simply not going to get better. You may have to make a few smaller sacrifices now in order to avoid bigger problems down the road. Keep a tight rein on your spending, start tracking your expenses, and create a budget. Even little changes like changing your television service to a smaller package or eating fewer meals out can really add up. You may be surprised by you at how much extra cash you have been spending on unnecessary things.
Alternative Debt Resolution Experts
If you aren’t sure what alternative debt resolutions are available or which ones might work best for you, contact the attorneys at Cornwell Law Firm today. We have years of experience dedicated to helping people understand their finances and their legal options, including alternative debt resolution and bankruptcy. We understand the stress of having your finances in turmoil, and we can help you get back on your feet.