Bankruptcy Bliss

Filing bankruptcy has a direct impact on the ability to get a new bank checking account for several years after the time you file. It is vitally important that you keep track of all accounts you hold and to keep them current. Once you file bankruptcy there are options available for those of you that can not seem to find a bank willing to issue a new checking account. Shop wisely and use common sense and you will find that with persistant and careful planning, you too can overcome your situation. All things just take time.

Alternatives to Personal Bankruptcy

If you are in financial trouble, you might have a few alternatives
besides filing for bankruptcy.Your creditors would prefer that you don’t file for personal bankruptcy. Most are willing to work with you. Creditors do not want to write-off bad loans. If you choose to negotiate with your creditors, you can hire a professional negotiator, seek help from a non profit credit or
debt counseling service or informally contact your creditors yourself.

Most of the time, I would suggest using a non profit counseling service.They are staffed by trained professionals who know how to negotiate with collection departments. A paid professional might or might not work harder for you, but he will definitely cost you money, a luxury you probably can’t afford.

If your creditors are will to negotiate, they could be willing to accept a smaller cash payment to settle their claim against you. Their other option is to hold off collecting proceedings and accept smaller cash payments over an extended period of time. By this method, the creditor would eventually have the entire debt paid off.

A combination of the two methods is called Individual Voluntary Arrangement. You and your creditors agree to re-pay a percentage of the total loans over a set number of years. This time period is usually 5 – 7 years allowing for very small monthly payments.

If you still have a decent credit profile, you could have two additional alternatives to bankruptcy. You might be able to refinance your loans through a new mortgage or a home equity line of credit. The interest rates would be much lower than either personal loans or credit card interest rates and the interest could be tax deductible, leading to additional benefits.

Balance transfers are another alternative involving credit cards.In some cases you will be able to transfer your credit card loans from higher interest rates to lower ones. Be careful of introductory rates for relatively short time periods because you might not be able to transfer to lower rate cards again if your debt continues to climb. Also, the lowest rates are for the better individuals with good credit scores.Another disadvantage is introductory rates are lost if you are late or miss a payment.I would suggest Life of Loan rates so you don’t have to worry about high “Go To” rates after an introductory period.

An unexpected alternative to bankruptcy might be – Do Nothing. Some people are “Judgment Proof”. If you have a low income and little or no property, and don’t expect your financial situation to improve materially in the future, you could be “judgment proof.” If you get sued and lose, they winner won’t be able to collect because you don’t have any assets they can legally take. You cannot be thrown in jail for debt.

Creditors can’t take basic essentials such as basic clothing, ordinary household furnishings, food, or Social Security payments, unemployment insurance, or public assistance benefits. Your creditors won’t sue you; they’ll write off your debt and take the loss as a tax deduction. After seven years, the debt will not be included on your credit report.