Try Debt Meditation Before Declaring Bankruptcy

People who are drowning in debt know the feeling of having sleepless nights due to stress. They know how it is to work yet never enjoy their income because it goes straight to their creditors. They’ve seen their credit card debts explode to seemingly impossible proportions. In times like this, a person’s first thought would be to declare bankruptcy. However, this is not the best option, especially if it’s just a temporary financial hardship. The better option would be to try debt mediation.

Informal Arrangements

One of the solutions people should consider when dealing with debt is making informal arrangements with the lender. Here, you negotiate the terms of your debt with your lender so paying off your debt becomes easier for you. This doesn’t in any way erase your debt, but you explore additional options on how you can raise the money.

Most people prefer to make informal arrangements on their own. However, since wallowing in debt is stressful for anybody, you may be incapable of making sound decisions when negotiating terms. The best option is to hire debt agreement administrators to mediate between you and the lender.

Believe it or not, some lenders are lenient when it comes to negotiations, especially if there’s a professional debt mediator involved. They know that most people go through temporary financial hardship every now and then. This means that even people who are capable of paying might not be able to do so because of a temporary crisis, like job instability, a death in the family, or other emergencies. If you are usually the type who pays off your debts without a hitch, your lender might be willing to make an exception for you until you get out of whatever temporary financial hardship you’re experiencing.

With a professional debt agreement administrator in tow, you can discuss the following elements of your contract:

  • Payment period – People who are dealing with temporary financial concerns usually only need an extension of their payment date. After their financial crisis is resolved, their capacity to pay is usually restored.
  • Payment terms – If the terms of the agreement are too difficult, then amendments can be made. If your agreement calls for a short payment period with higher monthly payments, you can ask for your payments to be stretched out over a longer duration, resulting in smaller monthly payments. You can also change payment terms to quarterly if your lender is amiable to this.
  • Interest Rate – You can change your interest rate from an adjustable rate to a fixed rate.
  • Other payment methods – Here you find other ways to pay off your debt. Your debt mediator might suggest including a friend or relative as a consignee to share the financial burden. You can also set valuables like vehicles as extra collateral.

Why Not Bankruptcy?

Bankruptcy feels like the easy way out to most people. However, this is not the way to go, unless you’re okay with losing everything. With bankruptcy, your financial status gets a hard reboot. You cancel out all your debts but at the cost of your assets. This should be treated as a last resort and not something you opt for each time you plunge deeper into debt. Remember, not all money problems are permanent. You will regret declaring bankruptcy for what turns out to be a mere temporary financial hardship. Debt mediation might seem like the longer and rockier road to take, but in the end you get to keep your assets plus you get back your much deserved financial freedom.

For more information about debt mediation, you can visit http://www.debtmediators.com.au/.

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