It is important to avoid bankruptcy by all means possible. As we all know, debt is a normal way of life for many consumers and as such, filing for bankruptcy would have a devastating effect on your credit rating. We all want to be able to borrow at any time the need arises. As such, it is advisable that one should seek ways of saving themselves from bankruptcy. Before you file for chapter 7 bankruptcy, it is advisable that you should at least consult your relatives to help you sort out your debt so that you can be creditworthy again. If your relatives are not an option, perhaps consult with a financial advisor to help you get back on track before you throw in the towel and give up altogether. There are many things that one can do to avoid bankruptcy. In this article, we shall discuss some of the things you can do to avoid this state of affairs.
Here are 4 things you can do to avoid bankruptcy:
- Sell some assets to pay off debts
If you have some assets that can be sold to offset some of your debts, then this is the best route to take. It makes no sense for you to apply for bankruptcy while you own some items that can be sold to offset some of the debts. You should not wait till you are behind payments for you to sell the assets. Do it as soon as you notice you may not be able to service the debts. You can sell some of the items on Craigslist, eBay, Amazon, and so on. This does not mean that you can’t replace these items in the future. This is just a temporary measure that can save you from bankruptcy.
- Pay your debts and renegotiate with your creditors
This is another plausible option that you have. If it is possible for you to pay your debts over a staggered period of time, this would be a good thing to do. You can reorganize your budget and your overhead costs so as to cut out costs that you can do without. You may also decide to look for a second or a third job so as to increase your income. This way, you can service your debts and avoid bankruptcy.
- Your creditors can help you avoid bankruptcy
You should talk to your creditors to understand your difficult financial situation so they can allow you to repay the debts when you can. It is vital for them to allow you to repay the debts and on easy terms instead of them losing their money when you apply for bankruptcy. Many banks and even credit card companies have some form of hardship programs that can help you out of this problem. Before you can get into this program, talk to your creditors to lower your interest rates as well as your monthly repayments.
- Seek help from friends and family members
This is one of the things that many people fathom. However, when you are on the verge of bankruptcy, it would be a good idea to seek help from friends and relatives. Have a plan on how you will repay these friends and relatives once they help you offset some of the bad debts. Remember that you should easily ruin the good relationship you have with them if you do not honor your promise.