Borrowing money won’t always lead to bankruptcy

The recession changed the market

Borrowing money doesn’t mean consumers have to file bankruptcy when they get into trouble. Today’s market is changing. The recession, along with unemployment rates, job cuts, and market conditions don’t make for the easiest of times. The good news is that difficult times open opportunities for people in trouble. Many people who formerly would have automatically looked to bankruptcy have some options now. These might just help.

Refinance a home

For consumers who are having a hard time making ends meet, now is a great time to look into refinancing. Interest rates are at historic lows, and it is a great time to try and reduce your monthly bills if possible. People with steady income and some equity in their home, refinancing can reduce monthly expenses appreciably. In an Economy.com article, Martin Battleman said that “It’s the perfect time to talk to mortgage companies…in particular if you are a good paying customer. They don’t want to lose you and with interest rates so low, it could save anyone from financial disaster.”

Negotiate with creditors

The market downturn wasn’t good news for anyone—and that includes lenders. It’s always possible to at least call a lender and try to negotiate. Having a good payment history can put you in better bargaining posture with lenders. Don’t put off calling until after you’ve missed a payment. A proactive approach is key to overcoming financial hurdles. As Battleman said, “The worst thing a customer can do is wait and lag behind in payments. Too many people freeze when they can’t pay their bills instead of act quickly. Talk to your lending company as soon as you know there might be a potential problem.”

Consolidate credit-card debt

Borrowing money can become overwhelming and the number of credit cards a person has can get out of control. Consolidation could be good for people with multiple credit cards. Sometimes getting rid of cards isn’t necessarily the best, but transferring balances to lower-interest cards can reduce monthly payment amounts. Consumers can also strategically focus on paying off higher interest cards. Doing so might stave off bankruptcy and cut down on enormous interest payments.

Renegotiate vehicle loans

Another good option is to talk to car lenders. A car payment is normally a large expense in a household. Sometimes you can renegotiate the payment amount on your current car loan. If not, you could refinance with a new lender with better rates. In any case, a little bit of hardball with car lenders can pay off.

The new view on bankruptcy

Borrowing money has put many people in difficult financial positions. A lot of people look into bankruptcy to get out from under their burdens, but other options exist. According to Battleman, “Bankruptcy is the only solution for some people—yes. But not all people. Some can be proactive and find ways to avoid something that may hamper them for ten years.”