Unfortunately, financial instability can come easier than expected. Keeping your accounts current can be challenging, between insufficient funds and high debt. But when financial hardship takes a turn for the worst, filing for bankruptcy may seem like the answer.
Conversely, there are alternatives to consider before filing for bankruptcy that could strengthen your efforts in debt relief.
Debt Settlement
Debt settlements involve financial forgiveness from creditors or debt collectors. For this method to work, you’ll want to be in default. Once creditors note that you’re in default and unable to pay off debt, they can negotiate lowering amounts to less than what you originally owe.
Additionally, creditors may consider unpaid balances as income, requiring you to report them on your tax return.
Debt Consolidation
Another bankruptcy alternative is seeking debt consolidation. This method would require accessing a loan or credit line that combines all outstanding debt into one place.
Debt consolidation also allows you to pay the debt at a lower interest rate since your credit score doesn’t have a significant impact.
Earn Extra Income
There are multiple avenues to take when wanting to earn extra income. You may show interest in a second job delivering groceries to others, driving for rideshare platforms, or creating goods to sell.
Whatever your route, remember that you’ll want to use your earned income to pay down your outstanding debt.
Budget Your Lifestyle
You can achieve a more sustainable lifestyle by lowering your expenses and changing your budget. Consider creating a budgeting plan to assess your necessary monthly expenses to income ratio and cut down on additional costs, such as streaming services.
A financial crisis can have a lasting impact on your credit score, but it would help to consider alternatives before filing for bankruptcy, depending on your debt and goals. At Superior Financial Services, we’re here to help. Our debt relief loans offer opportunities to consolidate your debt on better repayment terms. Consider applying and improving your situation today.
