There are some alternatives to filing for bankruptcy, but you have to carefully research them. You also have to see how they will specifically affect your individual situation before you commit to one of them. You do have to be very careful though as some of these so called alternatives will actually put you in a much worse situation then you are already in. Here are a couple of different alternatives you may want to look into before deciding to file for bankruptcy.
Some creditors will work with you to reduce the amount you owe. This is a common step before you decide to file for bankruptcy. You need to check the processes of the particular creditors though. Some of them will still require you to go through a formal process of debt reduction to do so. While you may think this is a good option, there are some hidden disadvantages you need to be aware of.
The IRS has the right to tax you on the amount you settled for as taxable income. By law creditors must report the amount of the difference between your debt and what you paid the creditor to the IRS. You will get a 1099 to report the information on with your taxes when you file. For example if you settle with a creditor by paying them 35% of the total you actually owe them, the IRS views the remaining 65% as income to you by the creditor.
The last think you want to do is end up owing a huge amount of money on your income tax. Most people who are in this type of situation don’t have the funds to pay in, and then end up with more debt. This is because they either have to borrow the funds or they have to pay it late with interest to the IRS.
A very common alternative many people choose instead of bankruptcy is debt consolidation. This is a loan where all of your bills are placed under one loan. This type of loan is likely to reduce your debt so your monthly payments are more affordable. Yet you may find out that this results in you having to pay more over the term of the loan for interest. In many cases it is much more than you would have paid to the credit card company on your own.
Many debt consolidation loans attach a balloon payment at the end of the loan terms. This means you will have to pay a very large amount of money at the end of the loan. Most people have no choice but to borrow more money to cover that balloon payment. If you choose any such bankruptcy alternatives, make sure they are really going to benefit you. Sometimes they can save you from having to bankruptcy attorney file for bankruptcy. Yet other times you will find that the alternatives available just won’t benefit your given situation.
If you found this information on bankruptcy alternative useful, you'll want to read this article about chapter 11 bankruptcy
http://ezinearticles.com/?Bankruptcy-Alternative---What-are-the-Alternatives-to-Bankruptcy?&id=688546
Some creditors will work with you to reduce the amount you owe. This is a common step before you decide to file for bankruptcy. You need to check the processes of the particular creditors though. Some of them will still require you to go through a formal process of debt reduction to do so. While you may think this is a good option, there are some hidden disadvantages you need to be aware of.
The IRS has the right to tax you on the amount you settled for as taxable income. By law creditors must report the amount of the difference between your debt and what you paid the creditor to the IRS. You will get a 1099 to report the information on with your taxes when you file. For example if you settle with a creditor by paying them 35% of the total you actually owe them, the IRS views the remaining 65% as income to you by the creditor.
The last think you want to do is end up owing a huge amount of money on your income tax. Most people who are in this type of situation don’t have the funds to pay in, and then end up with more debt. This is because they either have to borrow the funds or they have to pay it late with interest to the IRS.
A very common alternative many people choose instead of bankruptcy is debt consolidation. This is a loan where all of your bills are placed under one loan. This type of loan is likely to reduce your debt so your monthly payments are more affordable. Yet you may find out that this results in you having to pay more over the term of the loan for interest. In many cases it is much more than you would have paid to the credit card company on your own.
Many debt consolidation loans attach a balloon payment at the end of the loan terms. This means you will have to pay a very large amount of money at the end of the loan. Most people have no choice but to borrow more money to cover that balloon payment. If you choose any such bankruptcy alternatives, make sure they are really going to benefit you. Sometimes they can save you from having to bankruptcy attorney file for bankruptcy. Yet other times you will find that the alternatives available just won’t benefit your given situation.
If you found this information on bankruptcy alternative useful, you'll want to read this article about chapter 11 bankruptcy
http://ezinearticles.com/?Bankruptcy-Alternative---What-are-the-Alternatives-to-Bankruptcy?&id=688546
