Is It Possible To Achieve A Debt Free Life Without Filing Bankruptcy?

In most cases, there are always several better alternatives available, but if your situation is an extreme one, bankruptcy might be your only available option to get rid of your debt problems. Still, if you follow the right approach, do some planning in advance, stick to your plan with great financial discipline, and be consistent in your efforts, it is very much possible to achieve a debt free life without filing bankruptcy. The American dream is no doubt beautiful – a society, where everyone has a car, a home, and all the luxuries that people want. But, this dream costs money. Those who cannot buy this dream in cash (and majority of the people just do not have enough cash), they take loan to fulfill this dream. The dream is beautiful but the debt that it requires you to acquire sometimes takes a very horrible turn. Most of the Americans often fail to pay their debts in time and that is the reason why you see so many foreclosures and people getting bankrupt. If your debt situation also sounds like it is just beyond your control, not manageable at all, you may also be considering using the bankruptcy protection. But, it is very important for you to keep in mind that this type of protection does not come free of cost; there are some uncomfortable consequences that a bankrupt person has to face, as the fresh financial journey after bankruptcy is granted is not at all an easy one. The recovery process takes somewhere around seven to ten years. That is the reason why it always advised to consider better alternatives to bankruptcy. Following is a brief rundown on some of the possible alternatives that might just work in your case.

Practice Frugality

If you are serious about achieving a debt free life without filing bankruptcy, you must seriously consider practice frugality. Living a frugal life can help you save a whopping amount of extra cash, which you can use to pay off your debts. However, it is obviously a very tough decision, especially for those who area addicted to an expensive lifestyle. But, it is very important for you to keep in mind that considering the kind of situation you are in, you must be willing to make some compromises, no matter how difficult they are. You might be enjoying your current lifestyle, but you will not be able to afford the same anyway once you go bankrupt. Then you will be forced to practice frugality because you will have no other choice. Now, it is something you will have to choose to do willingly (nobody is forcing you). Do some tight budgeting and stick to your plan. Cut down your expenses to as low as possible. And, try to increase your income, such as by getting a second job or by working overtime.

Use The “Debt Snowball” Strategy

When it comes to achieving a debt free life without filing bankruptcy, the debt snowball strategy has been very popular. Many people have tried this concept and have succeeded. This concept is all about paying your debt and bills little by little. The process requires you to make a list of all your debts on the basis of priority. Obviously the highest rate debts must be on your priority. The sooner you pay them off, the faster you can regain control of your finances. You can start by paying those small debts first that you are charging you very high rate of interest. You will have to plan things very carefully. There can also be some exceptions. For example, even if a mortgage loan charges you the lowest rate as compared to other loans, but it has to be your top priority because if you keep on missing the monthly payments on mortgage, you may end up losing your home. So, the point is to avoid those bills where the consequences of non-payment are not very harsh.

Debt Consolidation Or Debt Settlement

Even programs like debt consolidation and debt settlement may also pave the path for you to achieve a debt free life without filing bankruptcy. There are several companies out there that offer these types of services. However, you must take your time to do the research thoroughly, as many of these companies might be unscrupulous who are more interested in making money from you rather than helping you to get rid of your debt problems. The debt settlement programs allow you to pay a much reduced amount of money than total outstanding debt balance in full and final settlement. Your creditors may just agree to any such proposal if you have a genuine case where you are going through financial hardship caused by circumstances that were beyond any control, such as a severe illness or injuries that caused you to lose your job. On the other hand, debt consolidation programs give you an opportunity to manage your debts easily, as you end up making only one consolidated monthly payment without the hassles of dealing with the creditors on your own (the agency does that on your behalf). The consolidation agency also convinces the creditors to make the terms more favorable. In most cases, as part of a debt consolidation program, all late fees and other penalty charges are waived off.

Overall, if you are determined to achieve a debt free life without filing bankruptcy, there are several ways to do that. You just have to make an informed decision on which option can work bets for you depending upon the kind of situation you are in.

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