Bankruptcy is typically the result of debts coming at you from every direction. If all debts are considered equal, it is hard for a debtor to get back on sound financial ground. When your budget is stretched to the point where it seems like bankruptcy is the only option, there may still be solutions that you haven’t considered or explored.
Negotiating with Lenders
One of the most overlooked solutions when debtors are facing bankruptcy is negotiating with lenders. Not being able to pay or falling behind on payments does not necessarily mark the end of the road with lenders. You can negotiate in an attempt to receive more favorable terms. There are quite a number of options that the lender may agree to, which will free up money in your budget to better manage debts. However, if there is any cancellation of debt, you may have tax consequences. You should consult with your accountant to determine how you may be affected.
The modification of a loan is possible. Contact each lender and explain your financial circumstances. You may find that many are prepared to reduce interest and monthly payments, or adjust the length of the loan. Special forbearance is also an option if you are experiencing a temporary financial crisis. The lender may reduce or stop payments for a specified period of time, after which you will agree to make higher payments to bring the debt up-to-date.
Depending on your credit score, you may be able to refinance some or all of your loans. You can do this through the same lender or another financial organization. Some debtors find that they are better able to manage repayments with a consolidation loan, for instance. It is important to carefully explore your options when refinancing. Some loan companies will offer attractive promotional periods, but once the grace period has ended, you may face much higher interest rates and fees.
If your credit is strong, you might consider seeking a cash advance from a credit card company. This option will allow you to pay off current debts. Tread carefully as there are a number of risks associated with credit card cash advances. There is no grace period, you will have to pay transaction fee (typically around 3%-5%), and interest rates are often high. You essentially are exchanging one debt for another, but are not making the debt go away.
Seek Consumer Credit Counseling
Working with a consumer credit counseling service may help you negotiate your way out of debt, or secure better terms. Make sure to use a government approve credit counseling service – and, preferably, one that provides free services. Many credit counseling services can negotiate on your behalf. However, the types of payment plan you might have with a credit counseling agency typically will only involve credit card debts and will not help with secured debts on your vehicles and home.
Speak to a Bankruptcy Lawyer
A Chapter 13 or Chapter 7 may eliminate or reduce many types of debts, and a Chapter 13 involves a repayment plan that may have better payment terms to creditors that allow you to keep your assets. Speaking to a bankruptcy lawyer does not commit you to filing for bankruptcy. H. Lehman Franklin P.C. offers expert consultation on debt management and bankruptcy in Georgia. If you are facing financial hardship, we can provide expert advice and guidance.
Call H. Lehman Franklin P.C. today if you need advice on filing for bankruptcy and other forms of debt management. A legal representative is waiting for your call at 912-764-9616 or email at email@example.com.