Being burdened with a lot of debts simultaneously maturing can
be a harrowing experience. Just thinking about the many
sleepless nights spent in absolute anxiety is enough to cast
fear upon anyone's soul. Juggling our finances is hard enough as
it is. To do so with the specter of gloom brought about by due
and demandable debts could really, and literally, drive us crazy.
There are many factors that would contribute to such a
terrifying state. Financial management, without a doubt, is one
of them. Financial management does not only entail a wanton
neglect of a budget plan and an uncontrollably vicious spending
streak. Often, it is caused by lack of proper education in the
in sound financial planning.
When we find ourselves in such a financial rut, we try to look
for available options that would help us get out of the hole we
have dug for ourselves. However, options drastically reduce in
number the deeper we get buried in debts.
But this shouldn't be taken to mean that we don't have any
options to resort to. There are some of them that are still
available, and they deserve a closer look if we want to get out
of our financial troubles.
There are still a number of options available for you. Let's
take a look at them.
Debt Consolidation
You could decide to merge your existing loans into one debt,
though not directly. Through debt consolidation loans, the
creditor would pay off your subsisting debt. You will then have
just one debt to pay, that of your new creditor.
Debt consolidation is often resorted to for the following
reasons:
It would extend the maturity date of your loans under the new
consolidated loan.
You would pay a lower interest rate under one loan.
It would be easier to manage a single loan than having to pay
off multiple ones every month.
Debt consolidation would not necessarily solve your debts per
se, but at least, it would buy you the time that you would need
to muster enough resources to settle your obligations. It is
still a good option, especially when several debts become due
and demandable within the same period.
Securing A Second Loan
Not as direct an option as debt consolidation, you could always
apply for a new loan to pay off an existing one. This would be a
great approach, not only in prolonging the maturity date of your
obligation, but also in paying a lower interest in the event
that the new loan has a lower rate than the previous one.
Second loans have always saved a lot of debtors from almost
certain disaster. Most loans do not ask for the purpose of your
desired borrowings anyway. By applying for a new loan, you'd be
able to delay eventual payment, and you'd be able to answer the
more pressing needs of your life.
Filing For Bankruptcy
Considered as the court of last resort, you could always file
for bankruptcy. You would need to have exhausted all available
remedies though, and you must prove to the court that your
application is done in good will, meaning you have no intention
whatsoever to defraud your creditors. You would also have to
establish through preponderance of evidence that you cannot
fulfill all your obligations once they have become due and
demandable.
Your assets would thereafter be placed under the case of a
court-appointed trustee. The said trustee would call all your
creditors to an assembly, called a 341 meeting, where your
assets would be liquidated and distributed among them, in
proportion to their respective claims. The portions of the debts
that cannot be fulfilled by your assets would be written as
losses for your creditors. After this, your debts would be
considered dissolved.
Though declaring bankruptcy has its benefits, it also has its
share of disadvantages. Among them is the negative mark it would
leave on your credit record, which would adversely affect future
loan applications as well as when you're applying for a job.
Also, you must be reminded that your line of credit may be
suspended for at least 2 years. It would take quite some time
before you could recover from a state of bankruptcy.
UPDATE: Congress has passed a new Bankruptcy Protection Law that
now makes it tougher to file and declare bankruptcy. Make sure
you understand how it will affect YOU.
Go to
www.1debtfreedom.com for your free no-obligation quote.
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About the author:
Talbert Williams offers debt consolidation, debt reduction,
credit card debt referrals and advice. For more information,
articles, news, tools and valuable resources on debt solutions,
visit this site:
http://www.1debtfreedom.com
