Debt tends to come in the way of many consumers. If you are facing excessive debts that you have no way out, you might have considered filing for bankruptcy. Considering that bankruptcy could have damaging effects on your credit score, it is advisable to find other options first.
1. Sell some of your assets
Do you have something of a higher or equal value to the amount of debt you owe? It could be a car, some stocks and bonds, or any other asset you can liquidate to get some quick cash. Liquidating your assets might seem like a loss, but on the contrary, it will help you clear your debts easily and quickly.
2. Lifestyle changes
Whichever option you choose, whether bankruptcy or not, you must make some crucial lifestyle changes. The sacrifices you will be forced to make will pay off in the long run. For instance, if selling your motorcycle will help you pay mortgage and avoid foreclosure, why not? You will also need to create a budget and track your expenses for best results.
3. Debt settlement
In case your debt is delinquent, you will find it beneficial to negotiate with the creditors you owe. The main advantage of doing this is the cash savings. The disadvantage is that our credit report will indicate that your debt was paid less than the owed amount. If this plan goes through, you might consider consulting a tax expert as you might have to pay taxes on the amount forgiven since it is considered revenue.
4. Do nothing
Although this does not seem much of an alternative, it is. Although walking away from debt is not a good thing, but you might need to. As long as you have no assets to pay the debts, you can never be thrown in jail. Your creditor is not allowed to take away the essentials such as social security, food and personal effects