Bankruptcy alternatives in New York include debt consolidation and credit counseling. Prior to filing for bankruptcy, there are a few alternate debt management strategies that are worth considering. Firstly, notify your creditors about your situation. Explain to them why you are unable to make your payments. In most cases, creditors will understand your dilemma and suggest new arrangements.
Bankruptcy Alternatives in New York: Debt Consolidation
Another bankruptcy alternative in New York is debt consolidation. Debt consolidation involves reorganizing various debt payments into one monthly payment, and as such making it more manageable. This can be achieved by obtaining either a secure or an unsecured debt consolidation loan. Although debt consolidation may seem like a suitable bankruptcy alternative, there are a few things to keep in mind:
- Unlike bankruptcy which may give you the opportunity to eliminate most unsecured, debt consolidation will require you to pay back debt.
If you default on your debt consolidation payment plan, it will have a negative impact on your credit score.
Bankruptcy Alternatives in New York: Credit Counseling
Credit counseling may be another another bankruptcy alternative. Credit counseling is a process in which a credit counselor creates a payment schedule, and requires you to make monthly deposits with the credit counseling service. These funds are then transferred to your creditors. One of the advantages of credit counseling is that creditors may grant you a reduced interest rate and a lower monthly payment. You may not use, or apply, for any credit during the program. A few important points to take into consideration if you wish to pursue credit counseling are:
- Not all creditors may be willing to be a part of the consolidation. This means that some creditors will have to paid directly while other are paid through the credit counseling plan. Consequently, it may become complicated to manage several payments.
- Credit counseling may not always work which often times results people dropping out of the programs and neglecting their obligations.