What you are about to read may stop you making the biggest mistake of your financial life.
In today's debt ridden society many people are in severe financial difficulties, often for reasons outside their control. Bankruptcy for many, is the last step in a long road of financial pressures but many opt for this solution too early and without considering suitable bankruptcy alternatives. Whilst bankruptcy may get rid of the immediate pressures it isn't necessarily the end of the problems.
When you file for bankruptcy your life becomes an open book for the court appointed bankruptcy officials. They will pry into all aspects of your life and you will be required to provide all your financial information, including bank accounts, savings, investments and assets. Anything that can be sold or converted to cash, including your family home and any valuable contents, will be disposed of and you may still have part of your income deducted from your salary to pay some of your debts.
But there are bankruptcy alternatives that may be less painful for many. Here I've listed 5 bankruptcy alternatives
1. Negotiate with your creditors.
When you get into difficulties you should contact your creditors as soon as possible. Contacting them sends a signal that you want to repay them.
Lenders are anxious to get their money back and sometimes they will go to great lengths to help you. They may be prepared to re-finance your debt to have it paid over a longer period with lower installments.
They will often be prepared to reduce or freeze the interest rate and will even cut the balance owing up to 75%.
2. Refinance your mortgage.
If you have a property, which you own outright or on a mortgage, there is the real possibility of you being able to refinancing your debts using a secured mortgage or re mortgage.
Refinancing your debts involves taking out a new mortgage, or an additional mortgage. Some lenders will lend up to 125% of the property value allowing you to pay all your outstanding debt and may even have some spare cash to treat yourself.
As the new loan is repayable over a long period of time (often 25 - 35 years) the monthly repayments are significantly lower than with short term debt and should be far more manageable
3. Refinance your debts using a debt consolidation loan.
Debt consolidation is where you take a new unsecured loan and use the funds to pay off your outstanding debts. Debt consolidation loans are repayable over a longer term at a relatively low interest rate and as a result the monthly repayments are lower. If the loan is secured on your property then the interest rate and payments may be even lower.
4. Sell your home and downsize.
One of the easiest ways to get out of debt is to sell your house or apartment and downsize or move into rented accommodation. The surplus cash can then be used to pay your debts and you can continue with your life without the pressure.
Selling up and moving home is, however, a difficult and often painful option. If you do sell however. you can determine the price and remain in control. If the house falls into bankruptcy, you lose control and the house may be sold by your mortgagor at auction for a price often considerably less than the price you can obtain in a normal sale.
5. A formal arrangement with your creditors.
A formal arrangement with your creditors can often be negotiated by specialist debt management companies and is filed with the courts. These arrangements are for 5 years. You pay an agreed amount each week or month to the debt management company and it is then divided between your creditors. While you continue to pay they are prevented from approaching you.
After the 5 year period is over any balance still owing is wiped out and you are free to live your life free of debt. If however you break the arrangement the normal result is bankruptcy.
As you can see, there are several sound bankruptcy alternatives for you to choose from. Everybody is under financial pressure from time to time, however you should not compound your problems by declaring bankruptcy too soon. Instead, choose the bankruptcy alternative that sounds the best for your particular situation and start working to repair your credit now.
Using a bankruptcy alternative means that in a few years you will have rebuilt your credit and will be back on track, whereas with bankruptcy it could be ten years before you can get back to normal.
John Edmond worked for many years in insurance and finance and now writes on debt management at Debt Management. Go to and A Beginner's Guide to Low Interest Debt Consolidation Loans for another article.
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Overcoming a Bad Credit History
Establishing new credit
One of the first steps to overcoming bad credit is to work on establishing new credit lines to begin supplying your credit history with positive reports. Often this new credit line can come in the form of a low credit limit credit card, and you should take quite a bit of care to make sure that you stay up to date on your payments for the new card. As you continue to make on-time payments, you'll begin to build up a comfortable amount of positive reports in your credit. It will still take some time until your credit begins to show the effects of this, but every little bit can help in the long run.
Repaying older debts
After you've begun building up some positive credit reports, it's time to start working on getting rid of older debts so that they don't add any additional negative reports to your credit history. Request a copy of your credit report, using it to find any outstanding debts that you might have so that you can contact the debtor directly in an effort to work out a payment plan to get the remaining debt paid off. As you gradually pay off your older debts, you'll find that the lack of new negative reports and the buildup of positive reports will start to show some small improvements in your credit score.
Repairing your credit
Of course, there's more to credit repair than simply paying off your old debts. Negative reports take time to expire, sometimes years... though once they do begin to expire you might begin to notice rapid improvements in your credit score. In order to help the process along, you should also take the time to review your credit report for inaccuracies or errors and report any that you find to the issuing credit bureau. They will investigate any claims that there may be errors on your report, and if they find in your favor or do not receive a response to their inquiries then the questionable entry will simply be removed so that it no longer negatively influences your credit report.
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
Find out how you can buy a home, even if your credit is so bad that you can't get a mortgage loan at http://I-can-buy.com now! Read more on this article...
One of the first steps to overcoming bad credit is to work on establishing new credit lines to begin supplying your credit history with positive reports. Often this new credit line can come in the form of a low credit limit credit card, and you should take quite a bit of care to make sure that you stay up to date on your payments for the new card. As you continue to make on-time payments, you'll begin to build up a comfortable amount of positive reports in your credit. It will still take some time until your credit begins to show the effects of this, but every little bit can help in the long run.
Repaying older debts
After you've begun building up some positive credit reports, it's time to start working on getting rid of older debts so that they don't add any additional negative reports to your credit history. Request a copy of your credit report, using it to find any outstanding debts that you might have so that you can contact the debtor directly in an effort to work out a payment plan to get the remaining debt paid off. As you gradually pay off your older debts, you'll find that the lack of new negative reports and the buildup of positive reports will start to show some small improvements in your credit score.
Repairing your credit
Of course, there's more to credit repair than simply paying off your old debts. Negative reports take time to expire, sometimes years... though once they do begin to expire you might begin to notice rapid improvements in your credit score. In order to help the process along, you should also take the time to review your credit report for inaccuracies or errors and report any that you find to the issuing credit bureau. They will investigate any claims that there may be errors on your report, and if they find in your favor or do not receive a response to their inquiries then the questionable entry will simply be removed so that it no longer negatively influences your credit report.
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
Find out how you can buy a home, even if your credit is so bad that you can't get a mortgage loan at http://I-can-buy.com now! Read more on this article...
Finding Loans with Bad Credit
Even though it may seem like it at times, having bad credit isn't the end of the world. While you might think that you'll never be able to get a loan that you desperately need because of your credit score, with a little bit of persistence and some careful preparation you'll find that there are a variety of different loan options available to you. The keys to finding a loan with bad credit are keeping your options open, having the right collateral, and shopping around to find the best interest rate that you can get.The information provided below should help you to find the best loan that you can, and even provides some advice on what to do if the loan you apply for is denied.
Considering lender options
The first step in finding a loan with bad credit is considering a variety of different lenders so as to find the one that's right for you and your loan needs. There are a number of different lenders out there, so don't limit yourself to simply checking one or two banks in your area for loan rates. Keep in mind the various finance companies, loan offices, mortgage lenders (if applicable), and online lenders that might offer interest rates and loan terms that are comparable if not better than those that are offered by the banks in your area.
Choosing the right collateral
Once you've figured out some of the lenders that you might request a loan quote from, you need to determine what you're going to use as collateral for the loan. Collateral is essential for a bad credit loan, since it serves as a guarantee to the lender that they'll get their money back no matter what and helps to convince them that you're worth the risk of lending money to.
It's best to choose collateral that has a higher value than you're attempting to borrow, especially if the collateral that you're considering is an item that would be easy to find a market for if necessary. The higher the value of the item and the easier it is to find a ready market for it, the greater the chance that you'll not only get a loan but also a good interest rate on that loan.
Shopping for a loan
After you've decided upon what you want to use as your collateral, it's time to start shopping around for a loan. Request loan quotes from all of the lenders that you'd decided upon previously, using the same collateral as the basis for each quote. Compare the interest rates and loan terms that are offered by each lender, finding the loan quote that's best for you and applying for that loan.
What to do if you're denied a loan
If you get turned down for a loan, remember that there are still other options available. Go back to the quotes that you had received previously and apply for the next-best loans... if you're unable to get one of the next two best, you might want to begin your search again and consider a few additional lenders that you hadn't previously.
You might also want to attempt to get a pre-approval from a lender, which means that they review all of your information as though you were submitting your actual application while you're still getting your loan quote. This can save you time and frustration, since a pre-approval means that should you apply for the loan that you're pre-approved for you'll be already approved for the loan at the quoted rate.
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About The Author:
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
Don't let bad credit stop you! Find out how to buy a home when you have bad credit at http://I-can-buy.com today! Read more on this article...
Credit Repair (Part 2) - Solving the Problem
It is possible to fix your bad credit, with time, patience and determination. The first step in repairing poor credit is fixing any problems you may have with money.
1) Get a credit reports on yourself and check out what is on them. To get yours free go to www.annualcreditreport.com. You are allowed by U.S. law to get a free copy from each of the three major credit companies once every 12 months.
2) Once you have your credit reports, check them for accuracy. If there are any errors or things you disagree with, you are entiltled by the Fair Credit Reporting Act law to dispute anything in the report that is not accurate. Write to the credit reporting company and explain what the problems are. They will then investigate the matter and let you know what happens. If they find the information is not accurate, they will fix that on your credit report.
Unfortunately you can't remove anything negative that is accurate information about you. Only time can do that. But adding more good information does help.
3) If your credit needs repair, start work on it now. Start paying off old unpaid debts and loans, starting with the smallest ones.
4) Start paying more than the minimum payment on your current credit card payments.
5) Do not get into any new debt. This is essential. Make it a priority to get out of debt. Cut up (or lock up) the credit cards, if they are a problem for you. Make it a commitment to become debt free.
6) Live within your means. Make a budget and live by it.
7) Start saving money. If you have poor credit, it is much easier to buy a home or a car with a cash down payment, than without one.
There are many sources of help available. Consumer Credit Counseling Service is one of the best for help repairing credit and getting debt under control. Their website is located at http://www.cccsintl.org. Consumer Credit Counseling Service provides budget counseling, educational programs, debt management assistance and housing counseling. There are also many local branches of this nonprofit organization, so check for one near your location.
There are many "for profit" organizations that will help you with debt consolidation loans, but beware! They often are very expensive. You can get free reliable help that you can trust from a non-profit organization like Consumer Credit Counseling Service instead of paying hundreds of dollars to one of them. Or, you can educate yourself and do it for free.
Some other good places to go online for more credit and financial advice are listed on my website at http://i-can-buy.com/resources.html
By Alexis Dey © 2006 Mohave Publishing. All rights reserved. http://MohavePublishing.com
For ideas on how to buy a house when you can't qualify for a home mortgage loan because of poor credit, look for the exclusive FREE e-book, "Buying a Home When You Have Bad Credit," which can found at http://I-can-buy.com. Read more on this article...
1) Get a credit reports on yourself and check out what is on them. To get yours free go to www.annualcreditreport.com. You are allowed by U.S. law to get a free copy from each of the three major credit companies once every 12 months.
2) Once you have your credit reports, check them for accuracy. If there are any errors or things you disagree with, you are entiltled by the Fair Credit Reporting Act law to dispute anything in the report that is not accurate. Write to the credit reporting company and explain what the problems are. They will then investigate the matter and let you know what happens. If they find the information is not accurate, they will fix that on your credit report.
Unfortunately you can't remove anything negative that is accurate information about you. Only time can do that. But adding more good information does help.
3) If your credit needs repair, start work on it now. Start paying off old unpaid debts and loans, starting with the smallest ones.
4) Start paying more than the minimum payment on your current credit card payments.
5) Do not get into any new debt. This is essential. Make it a priority to get out of debt. Cut up (or lock up) the credit cards, if they are a problem for you. Make it a commitment to become debt free.
6) Live within your means. Make a budget and live by it.
7) Start saving money. If you have poor credit, it is much easier to buy a home or a car with a cash down payment, than without one.
There are many sources of help available. Consumer Credit Counseling Service is one of the best for help repairing credit and getting debt under control. Their website is located at http://www.cccsintl.org. Consumer Credit Counseling Service provides budget counseling, educational programs, debt management assistance and housing counseling. There are also many local branches of this nonprofit organization, so check for one near your location.
There are many "for profit" organizations that will help you with debt consolidation loans, but beware! They often are very expensive. You can get free reliable help that you can trust from a non-profit organization like Consumer Credit Counseling Service instead of paying hundreds of dollars to one of them. Or, you can educate yourself and do it for free.
Some other good places to go online for more credit and financial advice are listed on my website at http://i-can-buy.com/resources.html
By Alexis Dey © 2006 Mohave Publishing. All rights reserved. http://MohavePublishing.com
For ideas on how to buy a house when you can't qualify for a home mortgage loan because of poor credit, look for the exclusive FREE e-book, "Buying a Home When You Have Bad Credit," which can found at http://I-can-buy.com. Read more on this article...
Credit Repair (Part 1) - Defining the Problem
Before you begin the process of repairing your credit, you first need to ask yourself why you are having credit problems? Poor credit is nothing to be ashamed of. It is far more common than you may realize. Often it may not even be your fault, like Gerald and Lisa.
They invested five years and all they money they saved to start a small sign company. Then one summer someone broke into their business office and stole all the computers and expensive sign-making equipment. Unfortunately they did not have any insurance to cover what was stolen, so they had to take out loans to replace the items so they could stay in business. It took them years to recover financially from that, leaving them with bad credit.
On the other hand, like Paul, some people make poor credit decisions. After Paul got his first card, shortly after graduating from college, he suddenly became flooded with offers for more credit, which he promptly took up. He wanted to show everyone that he was a success at his new career as a sales manager, so he filled up all his credit cards.
Then he began the juggling game of "robbing Peter to pay Paul," which only got him deeper in debt. He took out a consolidation loan to pay off all the cards and put the debts in one big payment, but the temptation of all the empty cards was too much for him and he filled them all back up again. He finally had to declare bankruptcy because he was so deeply in debt that it was beyond his ability to ever pay off.
So, take a good look at what is going on in your life. Why do you have credit problems? Are you in debt because of circumstances beyond your control or is it a chronic situation? Are you still getting deeper into debt or are you fixing the problem? There is no point in fixing your credit if you will just end up losing it.
If you find that you are getting too deep in debt, there are several things you can do right away to help the situation, before it gets out of your control.
* Contact the credit card companies and see if they will work with you to help lower the monthly payments.
* Talk to a nonprofit credit counseling company, like Consumer Credit Counseling Service at http://www.cccsintl.org. They provide budget counseling, educational programs, debt management assistance and housing counseling. They have branches in many location of the United States.
Beware of some "for profit" organizations that will help you with debt consolidation loans. Often they are very costly. Why go to them when you can get free reliable help from a respected non-profit organization like Consumer Credit Counseling Service?
There is no quick fix for credit problems, but with a little patience and determination, you can not only get it under control, but you can end up with great credit and the feelings of success and self-worth that go along with it. So take the first step and determine to get debt free today!
By Alexis Dey © 2006 Mohave Publishing. All rights reserved. http://MohavePublishing.com
For ideas on how to buy a house when you can't qualify for a home mortgage loan because of poor credit, look for the exclusive FREE e-book, "Buying a Home When You Have Bad Credit," which can found at http://I-can-buy.com. Read more on this article...
They invested five years and all they money they saved to start a small sign company. Then one summer someone broke into their business office and stole all the computers and expensive sign-making equipment. Unfortunately they did not have any insurance to cover what was stolen, so they had to take out loans to replace the items so they could stay in business. It took them years to recover financially from that, leaving them with bad credit.
On the other hand, like Paul, some people make poor credit decisions. After Paul got his first card, shortly after graduating from college, he suddenly became flooded with offers for more credit, which he promptly took up. He wanted to show everyone that he was a success at his new career as a sales manager, so he filled up all his credit cards.
Then he began the juggling game of "robbing Peter to pay Paul," which only got him deeper in debt. He took out a consolidation loan to pay off all the cards and put the debts in one big payment, but the temptation of all the empty cards was too much for him and he filled them all back up again. He finally had to declare bankruptcy because he was so deeply in debt that it was beyond his ability to ever pay off.
So, take a good look at what is going on in your life. Why do you have credit problems? Are you in debt because of circumstances beyond your control or is it a chronic situation? Are you still getting deeper into debt or are you fixing the problem? There is no point in fixing your credit if you will just end up losing it.
If you find that you are getting too deep in debt, there are several things you can do right away to help the situation, before it gets out of your control.
* Contact the credit card companies and see if they will work with you to help lower the monthly payments.
* Talk to a nonprofit credit counseling company, like Consumer Credit Counseling Service at http://www.cccsintl.org. They provide budget counseling, educational programs, debt management assistance and housing counseling. They have branches in many location of the United States.
Beware of some "for profit" organizations that will help you with debt consolidation loans. Often they are very costly. Why go to them when you can get free reliable help from a respected non-profit organization like Consumer Credit Counseling Service?
There is no quick fix for credit problems, but with a little patience and determination, you can not only get it under control, but you can end up with great credit and the feelings of success and self-worth that go along with it. So take the first step and determine to get debt free today!
By Alexis Dey © 2006 Mohave Publishing. All rights reserved. http://MohavePublishing.com
For ideas on how to buy a house when you can't qualify for a home mortgage loan because of poor credit, look for the exclusive FREE e-book, "Buying a Home When You Have Bad Credit," which can found at http://I-can-buy.com. Read more on this article...
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