Alternatives to Declaring Bankruptcy
Americans are carrying a heavier debt than ever before. According to the Federal Reserve, 1.6 million people declared bankruptcy last year while consumer debt was up 4.5 percent. When a family can barely make the minimum payments on their credit cards or is living from paycheck to paycheck, an unexpected financial challenge can quickly bring them to their knees. Unemployment, illness, divorce or other unexpected economic setbacks can drive even the most financially sound budget over the edge.At such times bankruptcy is often considered, and sometimes it's the right choice. But are there other options? Yes!
Option 1
- Consolidation Consolidating all your outstanding debt into one loan might be your answer. Some credit card companies let you transfer outstanding balances from other cards and offer low or no interest for the first few months. If your credit is good and your debt is mostly in the form of charge cards, this may work for you. However, be aware that when the promotion is over, some interest rates will jump as high as 24%. However, if you continue to open new accounts and transfer balances, this will end up lowering your overall credit score.A home equity loan or refinancing an existing mortgage can also be an option. Mortgage rates are still low in comparison with many other types of loans, and some lenders will let you borrow up to 100% of the value of your property. Keep in mind, though, if your financial problems continue, your home is now at risk.
Option 2
- Credit Counseling Companies Consumer Credit Counseling Service, or CCCS is a nonprofit debt counseling service that assists consumers who are over their heads in debt. CCCS is funded and controlled by the credit grantors and credit bureaus. Often, CCCS provides a beneficial service to the consumer. Because of the obvious allegiance between CCCS and the credit bureaus, you cannot reasonably expect CCCS to do anything that the credit bureaus would frown upon, such as helping you restore your credit. In fact, if you decide to leave CCCS before you have finished their program, they can note your failure to complete the process as a negative listing on your credit report. When you participate in the CCCS program, your creditors will sometimes (though rarely) note it on your credit report. The fact that you resorted to a debt counseling program is a huge red flag for prospective credit grantors. Remember, paying off your debt is a step in the right direction, but it does not restore your credit.You're a good candidate for credit counseling if:
- You can't pay the minimums on your credit cards.
- You're consistently late paying one or more of your regular bills.
- Creditors and collection agencies are hounding you.
- Your efforts to work out reasonable repayment plans with your creditors have failed.
Big up-front fees - credit counseling companies usually charge a fee of about ten dollars. If you're paying too much more, be concerned.
Non-accredited - credit-counseling services should be affiliated with either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
Untimely payments - some agencies will pocket the first month's payment as their fee. Find out when and how much the agency will pay to your creditors each month and monitor those payments. It's your credit history at stake.
Too good to be true - legitimate credit counselors will not be able to make debts disappear or promise that by using their services it won't effect your credit report. They can help you lower your interest and pay off your debts, but it still may affect your credit history.
Option 3 - Personal Credit Negotiations
By tackling creditors yourself, you can often negotiate better terms for your loans such as, reduced interest rates, lower monthly payments, waived late fees, or extended payment time. Simply call your creditors, explain your situation and ask them what they can do for you.Being assertive and proactive at the first signs of economic trouble can help you avoid financial insolvency. The sooner your credit is under control, the sooner your life can get back to normal.
A way out
There is hope. Thousands of consumers have learned firsthand how legitimate credit repair firms are a money saving solution to their credit history problems. By disputing items that are inaccurate, unverifiable or misleading, legitimate credit repair firms can work to remove bankruptcies from credit reports.Lexington Law Firm has helped over 200,000 consumers repair their credit reports for over fourteen years. At Lexington, a staff of lawyers is dedicated to creating a fusion of strict regulatory compliance with innovative solutions for repairing credit reports. In 2004 Lexington legally delete 260,000 negative credit items from their customer's credit reports. This number includes an amazing total of 2,801 bankruptcies.
In accordance with federal regulations, Lexington Law Firm charges retroactively for services performed each month, and the consumer may cancel at any time. Lexington's experienced attorneys are ready to provide quality services at affordable rates. So why wait?
Members of the Consumer Advocate Association:
Credit Instructor.com
Learn about the importance of you credit score and credit report, how you can manage your credit report and what you can do to help take care of problems in your credit history. Find out how your credit score affects mortgage rates, how to read your credit report and how your credit history affects your employment opportunities.Credit Report Dispute.net
You shouldn't be the victim of the bureaus' inability to report correctly. It is unfortunate that you have to take the initiative and make sure all questionable items on your report are correct, but at least the law requires the bureaus to reinvestigate any item you find innacurate, misleading, or unverifiable.CreditRepairRights.com
Why is credit repair legal? Learn about the laws that enable consumers to ensure their credit reports are accurate and the what you can do about your bad credit.