If you are starting to find your debts unmanageable and have
reached a stage where your credit card payments are starting
to out weigh your income, it is likely that you have become
insolvent. Insolvency can be caused by poor
financial management or matters beyond your control, such as
job loss or illness or injury. Regardless of the causes, if you
have become insolvent you should seek a remedy immediately. Although bankruptcy may
be the best option, there are alternatives to
consider.
Once again prevention is better than a cure. Insolvency is often
caused by a failure to deal with mounting debt before it becomes
unmanageable. Put simply don’t run away from your creditors.
Avoiding your creditors is the worst possible course of action.
If you have reached a stage in which your debts are becoming
difficult to manage you should contact your creditors and try
to come to an informal arrangement. Many creditors provide hardship
provisions which could help to alleviate your financial problems
and make your debt more manageable. These provisions could provide
you with more time to pay, allow for a renegotiation of loan
repayments or in extreme circumstances allow you to repay a lower
amount.
You should also seek financial help from an organization that
has the expertise and experience to provide you with the information
and advice you need.
Another alternative is debt consolidation. By applying for a
debt consolidation loan you can have all of your debts rolled
into a single loan repayment. Debt consolidation can significantly
simplify the management of your debts, instead of having multiple
repayments with different interest rates your debts are consolidated
into a single loan with a single repayment due per week or month.
However acceptance for a debt consolidation loan is up to the
discretion of the credit provider and you are unlikely to be
accepted for a consolidation loan if your financial situation
has already gotten too far out of control.
One insolvency option that is becoming increasingly more popular
is a debt settlement agreement. Debt settlement
agreements offer a formal alternative to bankruptcy. Unlike informal
arrangements, an accepted debt settlement agreement is bound
by law.
In many cases bankruptcy is still the best option. Many people
unnecessarily avoid bankruptcy due to the negative stigma attached
and an unwillingness to confront the reality of their problem.
If you have carefully considered the alternatives and sought
financial help you may find that declaring bankruptcy is the
most appropriate course of action.
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