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| Prevent Bankruptcy > bankruptcy alternatives |
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Prevent Bankruptcy - Bankruptcy AlternativesBankruptcy alternatives (and how to avoid bankruptcy): Alternatives to declaring bankruptcy abound. But you need to consider whether any of the advertised bankruptcy alternatives really will show you how to avoid bankruptcy. Bankruptcy alternatives to consider: Have you seen the commercials? Cute characters promise financial prosperity. Happy, professional individuals appear to regularly visit their corner pay day loan shop as proudly as cashing a check at the bank. Customers at the grocery store all recommend pay day loans as the easy solution for a lack of funds. These commercials could really give the impression that bankruptcy alternatives include pay day loans. Could pay day loans be the answer consumers facing possible bankruptcy have been looking for? Is there any harm in using these services? Aren't they better than using credit cards or going hungry? Will they help you learn how to avoid bankruptcy? In a word - NO! Pay day loans are NOT good bankruptcy alternatives. WHY USE A PAY DAY LOAN? Some individuals reason that paying a bill with borrowed money is better than receiving bad credit marks because of not paying the bill. This reasoning is, to some extent, understandable. However, some financial institutions are willing to make the occasional exception if contacted about the situation. Or there may be a small fee, but not a credit report made. - Much better bankruptcy alternatives if you're teetering on the edge of bankruptcy, don't you think? Using it for groceries or other items? Does this sound like an alternative to bankruptcy to you? Consider the true cost of any proposed bankruptcy alternatives before making a decision. Compare the cost of using a pay day (or cash advance) loan to the fees charged for taking a cash advance on your own credit card. Can family help? Often those who are forced to use pay day loans are not able to repay the loan by the next pay check and that can lead to a cycle of debt and stress. It doesn't sound too much like a bankruptcy alternative when you think about it, does it? WHAT IS THE COST OF A PAY DAY LOAN? Bankruptcy alternatives include schemes of arrangement with creditors, but bankruptcy alternatives should not include getting yourself further into debt! Several sources, including a consumer report by the FTC (Federal Trade Commission) and the CFA (Consumer Federation of America) state that usual the usual APR is between 350 - 650% with some as high as 780%!! A loan of $100 ranges in cost between $15 - $30. If the loan is not repaid by the pay date then it can be renewed with another fee due at each renewal. A loan of $100 can cost $60 in fees after 3 renewals. This is much more likely to send you into bankruptcy, than help you avoid bankruptcy or show you how to avoid bankruptcy, whether it be a California bankruptcy, a Texas bankruptcy, or whether you're looking at bankruptcy alternatives anywhere else. WHO BENEFITS? Based on the warnings issued by federal and consumer organizations, pay day loans are definitely not bankruptcy alternatives. It is clear that using pay day loans or cash advances from these businesses can often lead to more debt and problems - quite possibly bankruptcies. Some sites were reported to automatically roll over the loan and only withdraw the renewal fee on the pay date. Other sites surveyed by the CFA required customers to agree in contract to not participate in class action suits or to file for bankruptcy. Possibly that sound like an alternative to bankruptcy, if you've agreed not to file for bankruptcy, but really it's not. One of your creditors is likely to file for bankruptcy if you don't! Bankruptcy alternatives shouldn't include getting yourself deeper and deeper into debt. For those who are having debt problems it is recommended to seek no- or low-cost credit counseling from a local non-profit organization. These organizations can help with reducing current interest charges and lowering monthly payments. If the problem is budget, you should look to a financial planner who can help you to manage the money you do have and avoid using credit at all. These are bankruptcy alternatives you should be considering. Your bankruptcy alternatives definitely should NOT include pay day loans. So what are YOUR bankruptcy alternatives going to include?
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