Though bankruptcy provides a clean slate to some people, this is not an easy solution. It is likely to destroy one’s credit and possibly force them in selling their assets. It may also impact future employment. As per the bankruptcy reform laws of 2005, it has become difficult to file for bankruptcy chapter 7 and has also restricted other bankruptcy rights.
For all those who desire to preserve their credit, they will be better off if they do all that is within their means to avoid bankruptcy. They should also think about debt consolidation as well as renegotiating with regards to some debt. Besides they can consider debt settlement as the final resort.
Tips to Consider
Below are some useful bankruptcy prevention tips,
- Create a Budget- Under this, the foremost thing is to total the monthly expenses. An easy means to keep away from bankruptcy will be paying off one’s debts via creating a budget. One should start by going through their monthly expenses. Here there are two easy steps that one can follow- either check their debit and credit card statements for the last 6 months or create a monthly expense list. Typical monthly expenses comprise of minimum debt payments, childcare expenses, transportation, insurance, healthcare, food, utilities, and rent/mortgage. To know more, visit positivedebtsolutions.com
- Renegotiate Debt- One can contact his/her creditor to explain their situation. For instance, if a person loses his job, explain about the total time it will take to find another job. Most creditors, like credit card companies, provide policies to assist people that are struggling to prevent going into bankruptcy. Rather than negotiating via their own with their creditors, they can take the help of a credit counselor for setting up an effective debt management plan.
- Avoid Debt Settlement- Though debt settlement is not as bad as that of bankruptcy, yet it is almost bad. Through debt settlement, one can stop making payments on their debt. Instead, they make payments to debt settlement companies. After some time, the company will approach their creditors for negotiating a settlement with the sum they have saved. Most importantly, one should work with debt settlement companies only through a detailed contract.
Living with any form of financial hardship whatsoever is a tough thing which an individual has to handle. It is something unfortunately that the majority have to deal with at some point. But there is a vast difference between going through the financial roadblock that is temporary and handling serious debt and shortages of fund that are long-term. Debts can make it impossible in doing things which most take for granted, such as eating healthy meals or having a roof. Bankruptcy undoubtedly is a very scary thought.
At times, it is an efficient solution to debt, yet can have truly dramatic implications when it comes to the credit rating of a person for a long-time after bankruptcy. Hence people must file it only when necessary. Follow the tips mentioned above and try your best to keep away from bankruptcy as much as possible.