Bankruptcy Alternatives
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How to Negotiate with Credit Card Companies as a Bankruptcy Alternative


On we provide information about bankruptcy alternatives. For many people, the least expensive bankruptcy alternative is to contact your creditors and work out a repayment plan.

If you owe $10,000 to three different credit card companies, you could contact them directly (not through a credit counseling company or a bankruptcy attorney or bankruptcy trustee). This strategy has a greater chance of success if you are relatively current with your payments, and if you are paying relatively high interest rates on your debts.

You start by contacting each credit card company and tell them you are considering switching to a competitor’s credit card with a lower interest rate. Obviously switching from a 19% per year interest rate to a 10% per year interest rate saves you a considerable amount in interest, and allows you to pay off your cards much quicker with the same monthly payment.

The credit card company may then offer to lower your interest rate if you agree to stay with them, because they do not want to lose a customer.

By talking to your creditors, it may be possible to get a reduce credit card interest rate.

This strategy will not always work. If you have bad credit, or are significantly behind on your payments, they will not lower your interest rate. In fact, the credit card company may increase your interest rate as a way to encourage you to move to another credit card company, so only try this strategy if your credit is in relatively good shape.

If you have good credit, negotiating with your creditors is and obvious alternative to personal bankruptcy.

Posted by Editor Bankruptcy Alternatives @ 7:14 pm

The "Three Year Rule": How to Evaluate Your Bankruptcy Alternatives


The best bankruptcy alternative is to pay your debts on your own. You will feel better about yourself, and you won’t have a personal bankruptcy showing up on your credit report.

But is repaying your debts yourself a realistic option? Is it realistic to get a debt consolidation loan to pay off your debts?

The answer depends on the “three year rule”. Here’s how it works:

Add up all of your debts, and figure out what monthly payment it would take to repay your debts in three years. For example, ignoring interest, if you owe $36,000, it would take payments of $1,000 per month for three years to repay your debts. If you got a $36,000 debt consolidation loan, again ignoring interest, it would take payments of $1,000 per month for three years to repay the loan.

Obviously you can’t ignore interest, so your actual payments in our $36,000 example would be greater than $1,000 per month; probably closer to $1,300 per month or more depending on the interest rate.

That’s the essence of the three year rule: can you afford to repay all of your debts in three years? If you are exploring your bankruptcy alternatives, the three year rule will help you decide if repaying your debts yourself is a realistic bankruptcy alternative.

Of course you could use a four year rule or a five year rule, but the longer it will take to repay your debts, the less likely you are to be able to succeed.

If you can cut your expenses and get your debts repaid in three years, that’s probably the best option. If you can’t, you will need to explore your other bankruptcy alternatives.

Posted by Editor Bankruptcy Alternatives @ 11:48 pm is a free resource
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