Alternatives To Bankruptcy - Part 2

2006-08-18

Read Part 1 of Alternatives To Bankruptcy

The first alternative is selling your assets. If you are like most people, you probably used credit cards or loans to buy things that depreciate in value instead of gaining value. These things include items such as televisions, electronics, automobiles, clothes, furniture, and even some jewelry. These things tend to lose value after they are purchased, and unfortunately, many people choose to pay retail value for them. Once you are in a situation where you are considering bankruptcy, if you decide to sell your possessions as an alternative, expect to receive a small amount of money compared to how much you originally paid.

In the case of clothes, you may even find that no one will buy them. While you will make more money by selling electronic goods, their value will be low. Depending on how much debt you have, selling your personal assets may not be enough to help you, but every little bit counts. If you are fortunate enough to be the owner of a home, you can do one of two things. You can sell it if you own it free and clear, or you can rent it out to tenants and become a landlord to help pay for your debt. While neither option is desirable, this is the price that must be paid when one acquires too much debt.

Another option is debt consolidation. A number of companies will allow you to consolidate your bills in a way that can allow you to save money each month. Setting up a payment plan with your creditors could also be helpful. If you have been saving money for your retirement, you may need to borrow it to pay off your debt. While this may help you in the short term, you will be subjected to penalties and taxes if you have a 401K, and this can hurt your future retirement plans. In addition to this, filing for Chapter 13 bankruptcy instead of Chapter 7 is a better alternative because it does not stay on your credit report for a long period of time.

As you can see, there is no perfect alternative to bankruptcy. Each option you choose will have advantages and disadvantages. However, these alternatives will put you in a better position than filing for bankruptcy, and you should consider all of them before you make a final decision.

Related Articles:
» Alternatives To Bankruptcy
» Chapter 13 Bankruptcy: What it means?
» Chapter 7 Bankruptcy: What it means?

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