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Is Personal Bankruptcy Bad? Do I really need to consider my Bankruptcy Alternatives?

 

The average person in a financial crisis will naturally consider personal bankruptcy as a possible solution to their financial problems. Unfortunately the new bankruptcy laws that came into force in October, 2005, make it harder to declare bankruptcy, and so considering all bankruptcy alternatives is more important than ever.

Most people do not realize that with the new bankruptcy laws it is harder to find a good bankruptcy attorney because the new law could penalize the lawyer for errors or oversights that they make.

You are also required to go through a very stringent means test to determine if you even qualify for personal bankruptcy.

You must also meet with a credit counselor for credit counselling in the six months prior to filing for bankruptcy. If you do not meet with a credit counselor, your application for bankruptcy may be denied.

These new requirements make it even more important to consider your bankruptcy alternatives, including debt consolidation loans and other bankruptcy alternatives, because for many debtors, personal bankruptcy is no longer an option.


Posted by Editor Bankruptcy Alternatives @ 8:48 pm
 

Is re-negotiating secured debt a bankruptcy alternative?

 

A secured debt is any debt secured by an asset. The most common examples are mortgages (secured by a house) and car loans (secured by a car).

If you are so far behind on your payments that you are afraid the lender will repossess the asset secured by your loan, and you fear that bankruptcy may be the ultimate result, re-negotiating the debt may be an alternative to bankruptcy. Here’s how it works.

Instead of waiting for the bank to foreclose on your house, or repossess your car, you could re-negotiate the debt with the bank. For example, if you are three months behind on your mortgage, you could ask the bank to take the arrears and add them to the balance of the mortgage. The bank may want you to extend the term of the mortgage, or they may want to increase your interest rate. If you house has increased in value, the additional equity may make it possible for the bank to lend you the additional money.

Re-negotiating loans may not work in all cases, but for many it is a good bankruptcy alternative.


Posted by Editor Bankruptcy Alternatives @ 12:49 am
 

 


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