Struggling with the prospect of bankruptcy due to insurmountable debt can be quite stressful. Individuals tend to think they have no way out of their financial woes and thus end up making a rash decision to file for bankruptcy. In reality, bankruptcy should only be your last conceivable option, as it will have far-reaching implications on your financial future. Instead, it is best to look for possible alternatives to manage your debt that could give you the chance to retain your assets and secure your financial future. Nonetheless, not many people are aware that they could have other options to consider. Here are a few alternatives that you contemplate when facing impending bankruptcy.
If you can foresee that you are going to fall behind when paying back your creditors, it is prudent to start seeking out informal debt management solutions. The first thing to do would be to contact your creditors seeking financial advice that would help in chartering a mutually beneficial course of action. An option you and your creditors could consider is adjusting your repayment plan so that you can stay up to date with your debts. Informal debt management agreements should enable you to remain in control of your financial affairs while showing the willingness to clear the debt owed. It should be noted that not all creditors would be willing to take this course of action, though.
PIA refers to a Personal Insolvency Agreement. On paper, it may seem quite similar to bankruptcy, but a PIA gives you control over your assets as you choose what you would like to sell and what you would prefer to keep. As with an informal agreement, some creditors may reject your PIA, but it does not hurt to put it on the table.
If you cannot come to an informal agreement with your creditors, you may have to consider a formal option that will not include bankruptcy. The most common choice in this alternative is by applying for a DOI, which stands for Declaration of Intent. This debt solution will instruct your creditors to cease any attempts to recover their debt for a given period. The duration of the DOI is supposed to give you some breathing space to enable you to come up with a workable way forward of paying off your debt. As long as you adhere to the DOI, you should be able to control the how you will pay off your debt while staying assured that the creditors will not proceed with additional recovery procedures.
Either way, make sure that you talk with your debt collectors.