Filing bankruptcy stays on a credit report for ten years. After filing, it may be difficult to get certain jobs or find a place to live. There are alternatives to bankruptcy if you’re drowning in debt. Here are some tips on how to avoid bankruptcy.
Seek Professional Help
Many consumers don’t understand bankruptcy. Filing Chapter 7 means the debtor must liquidate assets to pay creditors. On the other hand, Chapter 13 filers pay their debt over a period of years. Credit counseling is required before filing bankruptcy. Take advantage of the requirement to ask the counselor for help. They may be able to work out repayment terms with creditors so bankruptcy won’t be necessary. Likewise, schedule a Free bankruptcy consultation with an attorney. The attorney may advise against filing.
Going it Alone
Consumers must put themselves on a budget. Every dollar made should be accounted for. That means you know where the money will be spent when you get it. Be prepared to live frugally for a while. Avoid entertainment, eating out, and shopping. Further, go ahead and cut up the credit cards. Credit cards should never be used if one is in financial trouble. However, it’s a good idea to try to obtain lower interest rates for the cards. You could be successful, and there will be extra money to spend elsewhere.
Many corporations are willing to settle debts with consumers. Remember, debt settlement is a last-resort action. Further, don’t use a debt settlement company because they charge fees. Why pay for something you can do yourself? Up-to-date accounts should not be settled. Rather, focus your attention on debts that are in collection.
Avoid debt consolidation like the plague. Indeed, debt consolidation leads many people to bankruptcy. There are a lot of unscrupulous consolidation companies out there that prey on debtors. Consolidating makes life easier in the short term. However, the end result is being in debt longer. Consolidation frees up some money, so it’s tempting to go on a foolish shopping spree.
Ask for Help
Prepare to ask family and close friends for a loan. Make sure you know how much money is needed to avoid bankruptcy. Likewise, have a plan in mind of how you’ll repay the loan. There’s no need to file bankruptcy if you can pay the debts.
Get a Second Job
Getting a second job makes sense when one is in debt. Throw all the extra money earned toward debt. Search the internet for part-time, work-from-home jobs. The debtor can have the best of both worlds. You’ll be at home with the family and still earn extra money.
Get Rid off the Big One
Most individuals have one large debt they can live without. For instance, the debtor pays an astronomical amount for a sports car. Work out something with the lender to get rid of the car. There will be plenty of time to get a sports car later. Avoiding bankruptcy is the current priority.
Refinance the Mortgage
Mortgage companies often allow clients to refinance. Usually, the borrower must be current on the mortgage to qualify. Many federal programs are available aimed at helping consumers keep their homes. Refinancing creates extra money to pay off debt.
Bankruptcy should not be the first choice for consumers. Try alternative methods to raise extra cash and repay debt. Unload assets if it’s taking a lot of money to keep them.