How to Avoid Bankruptcy
For most people who are in debt avoid bankruptcy seems to be the last resort. But this is not true in all the cases. Bankruptcy can be avoided in many cases. People usually think that filing bankruptcy is a solution to their problems and it is much easier to file for bankruptcy. But they dont realize that a bankruptcy can remain on their credit reports for as long as ten years and this can cause a dent for their future life.
Well the best thing is the avoid bankruptcy till the time you can. Filing bankruptcy does not ease out your financial problems and moreover your case remains open in front of everyone. There are many ways by which a bankruptcy can be avoided. The first thing that you can consider is debt consolidation. By debt consolidation you get to combine all your debts into one and pay only one installment each month. The debt consolidation company looks after rest of the measures and settles your debt with the creditors. They would negotiate on your behalf and ask them to settle at a lower amount of interest rate.
You should make your own budget plan and adhere to it. Make sure that you avoid the use of credit card in most of the places where you can easily pay cash. If you get into debt then the first thing that you should do is cancel all your credit card accounts. Make a list of your income and the expenditure. Once this is done you would know where you are spending and where you can save. It is very important to maintain the effective cost that you incur every month.
Filing a bankruptcy has only one advantage that you no longer have to deal with the creditors and after the bankruptcy gets discharged then all your debts are released and the creditors cannot carry on the case anymore. Besides only a few advantages the disadvantages are more. With a avoid bankruptcy a person tends to loose almost every asset and also the value of each asset is reduced.
According to the old law a bankruptcy could be filed under two sections namely Chapter 7 and Chapter 13. Under the Chapter 7 you can keep your assets and most of the debts are likely to be written off. But this is not the case in Chapter 13, you promise to pay off all your debts within 5 years of filing avoid bankruptcy. According to the new laws most of the bankruptcies are filed under Chapter 13. Besides this you would have to go for debt counseling sessions according to the new laws. The counselors recommend you to attend money management courses. It is always recommended that you get in touch with a good bankruptcy lawyer when you think of filing bankruptcy.
Most people consider going in for debt consolidation program. This program helps you come out of debt easily and within a few months. But when you are consulting these agencies you also require limiting your expenditure. You should calculate your total earnings and the expenditure that you have for a month. Subtract the two amounts this is your surplus amount that you can use to pay your debt consolidation agency. The debt consolidation agencies negotiate on your behalf with the creditors to reduce the interest rates so that you would be able to pay back the amount.
You can consider dissolving your assets and can even consider borrowing some money from the pension funds to repay the
debts. Besides this you can even sell off some of the expensive items that you have. You can even consider doing a part time job so that you can write off your debts fast. Earning extra money can help you in increasing the surplus amount and you can pay off your debts fast.
You can even work out your debts with the debt management companies. These companies set out a budget for you and you are expected to follow the budget plan. They also help you consolidate your debts and also negotiate with the creditors on your behalf. Once your debts are consolidated make sure that you keep your payments in time. It is a known fact that when you are spending using a credit card none of the credit companies would make you aware of the consequences it is you who has to understand and follow a budget plan. The best thing is to block your credit card accounts and those cards that do not have much money left to be paid, pay off the bills and cancel the cards. You should also consider cutting down on the luxuries that you have been enjoying.
The best policy is to avoid getting into any situation like this. If you have self-control you can easily stick to the plans that you have made. Remember if you dont start your struggle today you might never come out of the situation. Bankruptcy leaves a black mark on your credit history and you can be denied of further loans and mortgages. Bankruptcy is not the solution to your financial problems. It can be avoided with a little self-discipline and with the help of a budget plan. You should start working from the beginning and should not wait till you get a notice from the creditors. So consolidate and pay off your debts before you have to face bankruptcy. There is nothing that is impossible, impossible in itself says I M (AM) POSSIBLE. So make a plan and stick to it.
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