Alternatives to Bankruptcy

Charlotte Debt Relief Lawyers

Filing for bankruptcy is a confusing and complex circumstance. Knowing what steps to take and whether bankruptcy is even right for you can be a tremendous task. With the legal assistance of a Charlotte bankruptcy attorney from our firm, you can be on your way to freedom from the pressures brought about by debt. If you are suffering from a significant amount of debt, you can have your debts discharged by Chapter 7 or Chapter 13 bankruptcy. There are other also other ways, and we can discuss these options with you during a case evaluation. Although there are many benefits to bankruptcy, it is important to know that there are also downfalls. It is our goal to provide you with the most accurate information that helps you through your specific situation. Everyone’s case is unique and requires a different solution. Filing for bankruptcy may not be the best solution to your debt problem. Our firm can explain the different forms of debt relief available. One alternative is debt consolidation. If high interest rates on your loans are the issue, we can help you by having these loans consolidated. Another solution is debt negotiation. An attorney from our firm can help you negotiate with the lender as to the amount of your monthly payments.

Is Debt Consolidation Right for Me?

As a debt relief lawyer, we’re often asked about the pros and cons of debt consolidation. This is largely because folks are inundated with a number of ads guaranteeing them lower interest rates and one easy payment. But does that tell the entire story? Of course not. There is a great deal more to consider before you decide to go the route of debt consolidation. If you’re currently struggling with debt, call a Charlotte bankruptcy attorney to learn what options are available to you for your situation. Debt consolidation is one tool among many, and like all tools, it works for certain jobs. Before you decide to contact a debt consolidation, give us a call or contact us online to discuss all your options.

What Is Debt Consolidation?

Debt consolidation is exactly what it sounds like. A debt consolidator purchases all or some of your outstanding debt, and then guarantees you a fixed interest rate that is preferably lower than the one you have already. You can make one payment to one lender, which makes the process easier to manage.

Debt Consolidation and Secured and Unsecured Loans

A secured loan is backed by collateral. This includes mortgages and car loans. Those who default on these loans forfeit the property that they’re paying for. Unsecured loans are not backed by anything. You simply make a promise to repay that money at interest. Credit cards are an example of unsecured loans. One fact that you should know about debt consolidation is that it’s very difficult to get an unsecured debt consolidation loan. Those who need one are generally unlikely to qualify. In other words, you will need to be able to pledge some asset as collateral for the loan. Generally this is your home, your car, or a retirement account, but there are other options as well.

Pros and Cons of Using a Secured Loan for Debt Consolidation

There are two major pros to using a secured loan to consolidate major debt. You end up with a lower interest rate and you can make one payment to one creditor. In all likelihood, you will see a remarkable reduction in your monthly payments. The bad news? If you don’t make your payments, the debt consolidator gets to take your stuff. If you’ve secured your loan with your house via a second mortgage, then they’ll take your house and you’ll lose any equity that you’ve gained on it.

Pros and Cons of Using an Unsecured Loan for Debt Consolidation

They biggest con is that they’re very difficult to get for people who really need them. Since unsecured loans require a greater risk to the consolidator, the chances of them taking a risk with someone who is in the weeds financially is low. Nonetheless, if by some miracle you can qualify, you should jump on that opportunity because you are not risking any property. The interest rates on all unsecured loans tend to be higher as well. This is something to consider if you do by chance qualify for an unsecured loan. You won’t be saving as much money as you would if choose to go with an unsecured loan. Therein lies the other catch-22 of the unsecured debt consolidation option. People rarely qualify and those who do may be better off going with a secured loan because it’s cheaper.

Debt Consolidation vs. Bankruptcy

Debt consolidation will not work for everyone. The fact remains that you will likely need some collateral that the debt collector will accept or else you wouldn’t be here considering debt consolidation as an alternative to bankruptcy. There is, however, one other major benefit to debt collection. It’s simply easier to organize your finances around one monthly payment than it is to manage several payments to different creditors. Most folks who opt for debt consolidation, however, do so because they don’t want to “ruin their credit.” While it’s true that bankruptcy will put a temporary black mark on your credit report, it’s a black mark that you can erase with time. On the other hand, debt consolidation does not put that black mark on your credit report. It offers you an easier and cheaper way to make payments.

Which Is Better for Me?

Chances are the choice will be forced on you one way or another. Clearly, bankruptcy is a more extreme solution than debt consolidation. If you can find a debt consolidator who is willing to buy up your debt, then that’s a less extreme solution to creditors calling you up looking for their money. Debt consolidation is one option among many for you to settle or repay your unsecured debt. Our office is always available as a resource to ask questions about your situation. We can sit down and chat about what your finances look like and come up with a solution that best fits your needs.

Get Started on the Road to Financial Freedom

At the Law Office of Jack G. Lezman, PLLC, our primary goal is helping you obtain financial freedom, in any way possible. If bankruptcy is not the right solution to your situation, we can help you find an alternative that works best. We may choose to settle your debt with the lender by coming to an agreement that permits your debt to be completely forgiven after a specific sum, less than the original amount, is given. Our Charlotte debt relief attorneys have assisted clients for more than 15 years and are prepared to help you with your situation. Contact the Law Office of Jack G. Lezman, PLLC to speak with one of our attorneys! We can help you find the best course to take!
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