subject: Various Available Alternatives To Bankruptcy For Cash Strapped Consumers [print this page] Often it happens that you are at the edge of declaring yourself bankrupt, in any such situation, all you need to do is to think with care. You must always look for the different alternatives that you may have before you declare yourself bankrupt. Bankruptcy has become very common nowadays, therefore, you need to take proper care in dealing with it.
You should only file for bankruptcy in a situation where you feel that you do not have any other option left. If you think there is still some way other than bankruptcy, which can get you out of trouble in a more effective manner, then you must utilise it. There are some options, which you can avail instead of bankruptcy, which are briefly explained in this article.
The first option is to apply for debt relief order. Like its name, it provides an individual relief from debt, with a number of terms and conditions that are applied. Only individuals who do not have their own accommodation, or have low earnings, and their debt is less than 15,000 are eligible to apply for debt relief order. Its time is one year, or 12 months to be clearer. In the duration of DRO, the creditors are unable to take any personal or legal action to recover their money unless authorised by the court. Nevertheless, if the financial situation of that individual remains same by the end of the term, then he/she will get free from the debts included in the order.
DROs have no involvement with the courts. They are run by The Insolvency Service in collaboration with competent and professional debt advisers, called approved mediators or intermediaries, who help the debtor, apply to The Insolvency Service for a DRO.
Another option is to take services from a professional legal representative who can represent the debtor. This is an effective way if utilised wisely. If one agrees to pay the full amount, and do not split it into small portions for payment later, usually, the creditors may agree to take 50-75% of the complete owed amount. This is considered as the most suitable option for those who owes a considerable amount of debt, and has some possessions that can be liquidated, as is established, to make negotiation possible between two parties.
One can also make little effort, and talk to the creditor on an individual basis or even by writing to them and evaluate if an effort can be made to get to a settlement. If the creditor agrees, then it is possible to make a revised plan in a way that will bring benefits for both the parties.
The only drawback of this unofficial and casual agreement is that there is no legal binding, and your creditors might not take into account that agreement on a later date, all the while asking you to pay in full. In this issue, you can take the assistance of your native Citizen's Advice Bureau, which can be very beneficial for you, as they will help you in taking an appropriate decision.
It is always best to ask for a professional advice. The attorneys are essentially more experienced than anyone else to give an insight into your case and can help assuage your debt problems.
