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Ways to Avoid Bankruptcy

Ways to Avoid Bankruptcy

Ways to Avoid Bankruptcy

Some consumers consider debt as a way of life and bankruptcy can have a devastating effect on your credit score. For some, bankruptcy must be utilized as a way to “start clean.” Should you find yourself struggling, consider these options before bankruptcy. Again, if you need to file, it’s not the end of the world and you should consult a professional.

Here are some ways to avoid bankruptcy:

Selling Some of Your Assets

You can sell whatever additional items you have and use the money to pay off your debts. You should take action and deal with it as soon as possible when you notice you cannot afford to make payments anymore. If you wait until you are behind on payments, it may already be too late. You can sell your extra furniture, jewelry, and other electronics. This is by far the most profound way to avoid bankruptcy. Many people cannot get through the hindrance of living without their “things”, but you can accustom to it and it’s just temporary. It will help you dodge bankruptcy and will also help spare your credit.

Pay Your Way Out of Debt

If you go through your budget thoroughly, you may be able to cut out unnecessary things such as subscriptions for Netflix, landlines and cell phones. These are just a few examples of some expenses you can cut without feeling too much discomfort. If you are already living on a tight budget, how about increasing your income by working part-time or, overtime? Your hobbies and other skills can also help you get some extra money to avoid bankruptcy.

Ask Creditors to Help You Avoid Bankruptcy

Your creditors would rather get some money from you than no money at all. Inform your creditors if you are facing financial difficulty and if you want to avoid bankruptcy. Convey your willingness to pay the debt and ask if they can help ease the burden by lowering your monthly payment or by decreasing your interest rate (or both). Many credit card companies and banks have hardship programs intended for this type of situation.

Seek Consumer Credit Counseling

Consult a professional. Find a consumer credit company(United Credit Advisors in affiliation with United Financial Counselors ) who has experience working with creditors to get your payment and interest rate reduced. The new bankruptcy law requires credit counseling prior to bankruptcy filings anyway so it’s worth it to strongly consider counseling as a bankruptcy alternative. The debt management plan payments may seem out of reach, but if you look, you may find holes in your budget that allow you to make the payments.

Get Help from Family and Friends

Generally, borrowing money from family and friends is a bad idea. It can initiate hardships and even end relationships. But, when one has no other choice, they can fall back on family and friends. Before asking, you must be certain how much money you require to avoid bankruptcy. Correctly consider how much you are able to contribute, then ask your friends and family to help you make up the difference. Before you approach them, come up with an idea for how you will repay them once your financial situation has turned around.

Settle with Creditors and Debt Collectors

Debt settlement is another of those things that under normal circumstances it is not ideal. However, first, if you have to choose between settling a few debts or filing bankruptcy, settle the debts, but do it right. Second, don’t settle those debts on which your payments are current. Just focus on debts that have already been charged off or sent to collection. Lastly, be ready to pay the lump sum settlement amount as soon as an agreement has been made. Should you need assistance contacting the agencies, call the professionals at United Financial Counselors.

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