Alaska residents, like many others across the United States and around the world, have been struggling to pay bills due to the COVID-19 pandemic. While some debtors need only worry about minor bills, such as groceries, car payments, insurance, and small credit card debt, others who owe thousands to creditors are in a state of panic. Many are even on the verge of losing their homes.

If you’re among those negatively affected by COVID-19 and are several thousands of dollars in debt in Alaska, it’s crucial that you know all the options you have at your disposal. 

Payment Deferral: Many lenders are currently offering deferments to Alaska residents as they try to obtain new employment. While this can alleviate the bulk of monthly expenses to a degree, it’s not a permanent fix. Most deferment policies merely add the current month’s unpaid amount to the end of the loan term. Some policies are kind enough to halt interest payments, but others call for continued interest accrual. If you apply for payment deferral and are approved, make sure the terms for repayment are clearly outlined and ensure you will not be negatively reported to the credit bureaus.

Debt Relief or Settlement: Alaska residents who are unable to make payments on their bills at the moment and have substantial amounts of debt have the option to file for debt relief. But beware! While many debt relief companies claim they’ll be able to wipe out at least 50% (or more) of your debts, their plans usually require those enrolled to pay a significant percent of the settled debt (if it’s even settled) to the company and you’ll still have to deposit an agreed-upon monthly amount (albeit lower than your existing monthly payments) into an escrow account. Once the account accrues enough value, the relief companies will try to negotiate with your creditors to settle your debts. However, there is no guarantee your creditors will accept the settlement offer, and worse, as part of the plan, you’ll need to stop making payments on your debt so you can expect your credit to plummet without a guarantee that the debt will be wiped out. According to an article on Credit Karma, debtors may end up owing much more than they originally owed.

Bankruptcy: Unlike payment deferrals and debt relief options, bankruptcy is a federal process that allows filers to reduce their total debt (Chapter 11) or wipe their slate clean altogether (Chapter 7). If you’re in danger of foreclosure, both options can offer protections on your property. And once approved, you won’t have to worry about any “surprises” as far as additional surcharges.

If you’re struggling with debt, bankruptcy may be the best option for you. However, it’s important to speak with a skilled bankruptcy attorney in Alaska who will be able to determine your best course of action. 

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