Alternatives To Bankruptcy
There are a number of factors to consider in deciding whether bankruptcy is an appropriate option. You may wish to consult an attorney before you decide to file for bankruptcy. Bankruptcy must always be your last option if there are really not other ways out of debt.
Consumer credit counseling is an alternative to bankruptcy, designed to help people who have money problems. It is a non-profit service offering free advice about how to get out of debt and how to use credit wisely.
Sometimes the free advice is all you need to get your finances in order. But if your debts are so overwhelming that you need continuing help, you may need to enter into a debt-management program. Assistance will be offered to help you develop a realistic budget, your creditors will be contacted to accept reduced monthly payments to match the new budget, and the Consumer Credit Counseling Service will actually make your payments for you with your money.
Consumer Credit Counseling Service is not a charitable organization. Counseling is free, but if the counseling service handles your payments to creditors under the debt-management program, a small monthly contribution is requested.
If you enter into a debt management program advised by the Counselor, you will be arranged with a debt management plan that involves:
- You then make a single monthly payment, all of which is distributed pro rata to your creditors. Every penny of your monthly payment goes to reducing your debts.
- Throughout the duration of your plan, you will have an assigned case officer whom you can contact should you experience any difficulties whilst the arrangement is in place.
- Your plan will be reviewed at regular intervals to ensure that it still meets your circumstances.
- The plan will continue until your debts are cleared or until you wish to voluntarily end the arrangement. Most common reason for this being an improvement in income enabling a client to leave the plan and revert to their original monthly payments.
- A full assessment of your financial situation is carried out. To do this, we need to know your regular income and expenditure, who you owe money to (your creditors) and any other relevant information about your personal circumstances.
- By collating this information into a Financial Statement, we are then able to determine how much you can realistically afford to offer each of your creditors.
- Your creditors will then be approached and asked to accept the reduced payments. In most cases creditors are happy to agree the plans we initiate because they know, from experience, that such plans are realistic and sustainable.
In short, Consumer Credit Counseling service let you explore your available options in handling your overwhelming debt issues. Debt management plan is a tool or system that helps you to handle your debt in a manageable manner. But the real debt help is found only in changing your spending behavior and have a good budgeting plan that enables you to spend within your affordability while you work hard to get rid of debt. You must get to know all your available options that can help you to get rid of your debt before you go for the extreme option, which is Bankruptcy Filing. Consumer Credit Counseling service can help you to explore what are your affordability and able to give you a good guide and advices on what you can do base on your current financial situation.
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