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How to Avoid Bankruptcy: Alternatives to Bankruptcy

This is not an article that aims at giving legal advice with respect to avoiding bankruptcy and looking for other alternatives to filing for bankruptcy. What it does is give you options that can be seen as alternatives to bankruptcy. It deals with the circumstances of an average consumer and not somebody with extraordinary needs or demands.

Bankruptcy and the Paying off of Debts

A common misconception is that filing for bankruptcy means you are free from your responsibilities as a debtor. This is not necessarily true because you might still have to pay your debts. This is why avoiding bankruptcy is the option to consider, if there are other alternatives to bankruptcy.

Of course there are occasions when people get away with it but in most cases, where not only is your credit affected by about 7-10 years but you also have to pay a part of the debt.

The Best Alternative to Bankruptcy

Debt Settlement is one of the more common ways to avoid bankruptcy. Here, an expert debt negotiator works with the creditor to reduce the amount owed by the debtor. It's a great option when it comes to debt relief, for people who have fallen behind on their instalments due to reasons beyond their control.

Another Substitute for Bankruptcy

The lowering of monthly payments by lowering the interest rate levied by the creditors, is another substitute for bankruptcy Taking this route, you will put you on the path of being free from debt in as little as five years or so. At times, creditors are reluctant to provide relief in this regard, as this monthly interest payment funds their operations. In such cases, it becomes difficult to avoid bankruptcy.

The Chapter 7 Bankruptcy Alternative

All the unsecured debt obligations of a consumer/client are cleared under this option. However, the consumer must turn over his/her property to the courts, which then sell it, to give the proceeds to the creditors. If you have no income, but have some kind of property, then the chapter 7 alternative is the ideal solution for debt relief and to avoid bankruptcy.

There are more bankruptcy alternatives, like Chapter 13 bankruptcy and the liquidation of assets. If you want to avoid debt bankruptcy, you should consider all these options closely.