Sell Some Assets
Take a look at your debt load and your available assets. Do you have things that you could sell to satisfy your debts? In bankruptcy, a trustee may do this for you — if you can do that now and avoid the whole bankruptcy process, you could be in a better place.
Negotiate with Your Creditors
Your creditors may be open to lowering your interest rate or monthly payment if you call to ask — in fact, many major banks and lenders have hardship programs for this reason. Explain that you’re looking to avoid bankruptcy and they may offer alternatives that can ease your financial strain.
Ask for Help from Your Friends
This option comes with major caveats: You must repay the money, and you must show up with a repayment plan when you ask for help. Many friendships have been lost over money issues, and we don’t want that to happen to you. But, this can be an alternative to bankruptcy: Setting up a borrowing plan with a set timeline for repayment will get you out from under your debt load.
Try Credit Counseling
Before filing bankruptcy, we’re all required to look into credit counseling. You can thank the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 for that — it’s a good thing. A good credit counselor will look at your entire financial picture, including your mortgage, credit cards, other debts and your assets, to decide if you’re a good candidate for credit counseling services.
They’ll also tell you if bankruptcy is the way to go and will direct you to resources.
Check out the National Foundation for Credit Counseling to search for a counselor in your area. And while you wait for your appointment, pull your credit report for free at AnnualCreditReport.com. See where you stand creditwise. Credit scores range from 300 on the low end to 850 on the high end.
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