Debt has become a MAJOR factor in the lives of many people. Getting out of debt is rapidly becoming an essential endeavor and is being undertaken by many in today’s economy. But, in some cases, bankruptcy may be the only option. We wanted to give you some things to try before you attempt to take that big step and claim bankruptcy. In some cases, there are options to eliminate some of your bad debts in a more suitable manner.
The first step is to sit down, make a budget and get a good picture of your current situation. Once this step is completed, you’ll be able to intelligently and confidently make decisions moving forward. You may see places that you can cut back in one area and apply that money to reducing your debt, which will give you a real “leg up” for the next step in this process. It will also give you a clear picture of what you can, and cannot do, as you negotiate repayment.
Next, talk to the lenders, whoever they are and request a debt workout program. This program is an agreement between you and the lender. Based on your discussion with the lender, you may be given a temporary reduction in interest rate, an extension of loan terms or even a partial elimination of some of the accumulated interest.
If your situation is not too bad, you might be asked to settle the outstanding amount of money by paying a reduced amount or via installments over some predefined number of months/years. When entering into discussion with your lenders, be ready to give details about your current situation, how you got there and your plan for moving forward. Be honest about what you are able to pay… do not over estimate your ability.
For those who have student loan debts, bear in mind that declaring bankruptcy would not free you from such a debt. You would still have to pay for the loan. Student loans are extremely difficult to escape unless you claim undue hardship. Even then, you would have to make a proper case of it in the bankruptcy court. So, don’t look to this area as a quick fix on your debt.
Alternatively, the company might prolong the repayment period. So, check all the relevant details before putting down your signature on any agreement form(s). To put it briefly, consider all your options and find out as much as you can before simply filing for bankruptcy. In many cases, there are options available, but it may take a little effort to find them.