A bankruptcy attorney shares insights on how to avoid bankruptcy

A bankruptcy attorney shares insights on how to avoid bankruptcy

It is almost impossible to live without incurring some debts. With the tough economic times, debt can sometimes be overwhelming. If you are thinking of filing for bankruptcy, think about how bad it might impact your credit score. Bankruptcy experts say that there are always other alternatives to save you from such serious decisions and save your credit rating. Consider the following options and avoid bankruptcy.

Sell some assets

Consider selling off some of the assets that you can live without so that you can use the funds to settle your debts. Do this as soon as you notice that you are struggling with payments. Do not wait for due dates to pass for you to start considering this option.

Take advantage of online business platforms to get a ready market for your assets. For instance, you can get customers for electronics, furniture, and jewellery fast. If you are sentimental about certain items, you may have to sacrifice them to save yourself from going bankrupt.

Cut down on some expenses

Look at your budget and consider cutting down on some of the expenses until you manage to pay off your debts. You can spend less on expenses such as cable, telephone or television costs for a while.

If you are not willing to make such sacrifices, look for ways to get additional income so that you can afford to pay off debts. For instance, you can try to earn from your hobby, or get a part-time job. Feel free to ask your employer for some extra working hours to make some overtime and budget your finances wisely.

Talk to your creditors

The people you owe can also save you from declaring bankruptcy. Talk to the creditors and be honest about your financial situation. If you admit that you are struggling to make repayments, they can help you ease the burden by reducing the interest rate or the monthly payment. Some of the credit card companies also have hardship programs to assist debtors in such situations. Before enrolling in a hardship program, ensure that the monthly payment is reduced.

Consider consumer credit counselling

According to the bankruptcy laws, every debtor should seek consumer credit counselling before filing for bankruptcy. A professional counsellor who deals with creditors can help you get your interest rates or monthly payments reduced. They can also intervene between you and the creditor to facilitate a debt management plan. With this plan, you should repay your debt within 5 years which is enough time for you to find alternative solutions to acquire the money.

Seek assistance from family or friends

Though this is not the best decision, the people close to you can sympathize with you in your financial struggle. Before approaching them, spare some time and calculate the amount of money you need to settle your debts. Consider how much you can contribute and let them chip in to help you with the difference. You also need a plan on how you will repay them to avoid straining your relationship with them.