HOW TO AVOID BANKRUPTCY: EXPLORE THE ALTERNATIVES

2007-03-08 10:33:40

( Financial )



People experiencing money troubles should not consider bankruptcy as a primary option. Be aware that declaring for bankruptcy can adversely affect your credit rating. You should explore the alternatives to bankruptcy first. Knowing how to avoid bankruptcy can help protect your credit worthiness.

If you have no regular source of income and you do not own any property that creditors can seize, you may decide to take no action at all. Your creditors will not get anything from suing you, and will simply write off your debts.

Work out an informal arrangement with your creditors. Devise a payment scheme that would be acceptable to both parties. If you do not want to negotiate on your own, you can also employ the services of a debt negotiation agency.

Seek credit counseling. Aside from providing tips on how to avoid bankruptcy, the counselors will also help you prepare a budget to keep track of how much you are earning and where your money is going.

Look for a reliable firm that specializes in debt consolidation. All your debts will be combined into a single loan. In addition, the debt consolidation company will convince your creditors to decrease interest rates and eliminate late fees. As a result, you only have to make one lowly payment every month.

Sell your assets that have resale value. The application of proceeds to your debt may reduce the amount you owe to a more manageable level.

To make a more informed decision, you might want to consult an attorney. Your lawyer will assess your financial situation and provide suggestions on how to avoid bankruptcy.

But if you are certain that there is no other solution to your financial woes, you can go ahead and file for bankruptcy. Just remember that bankruptcy should only be used as a last resort.


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