Avoid Declaring Bankruptcy
Tuesday, March 25th, 2008 Subscribe To Our Feed
Bankruptcy is not a process that you want to enter into lightly. Although it can help you if you have made a serious mess of your financial affairs, it can also hinder your future financial prospects if you are not careful. For instance, you will have a bad credit history for the first year or more unless you work hard at raising it. This may make it hard to get good mortgage rate deals or loans. Don’t get me wrong, bankruptcy has a time and a place, however you should work to prevent it ever being an reality for you. This article will give you some ideas on how to avoid declaring bankruptcy.
Firstly you need to create a budget and stick with it. I know, a budget is pretty dull and may take a certain spontaneity out of certain aspects of life but it will help you avoid getting into uncontrollable debt. Make a list of all the bills that are owed each month. Leave out incidentals like entertainment, eating out, and credit card payments. Subtract this amount from the monthly income. What is left is what will be used to pay credit card bills, put away in savings, and spend for leisure time activities.
Keep track of your bills for three or four months. This will give you an average amount for the bills that you can plug into your budget. If you can enroll in equal payment plans for utility bills, the payments will be the same every month. Creating a budget will help avoid debt, due to your discipline in following the guidelines that you have set. You can still enjoy a night out now and then as a reward for saving money.
Limit your use of credit cards. Credit cards carry high interest rates and they can soon spiral out of control. Everything is tailored towards using credit cards, be it easy payment in shops and restaurants and not having to carry cash around with you. Financial institutions also make it easier to get cards and advertise the benefits of using their cards. Why ? Because they make lots of money out of them. Avoid all the temptations of easy credit.
Keep one credit card and get rid of the rest. Companies extend you credit with the hopes that you get overextended and then they can charge higher interest rates and all sorts of fees. Save yourself the headache and avoid using them. Factor the credit card charges into your budget and pay them off each month if possible.
If you ever get behind in a payment, call the credit card company. Explain your situation and tell them that you will soon be able to service this debt regularly with a bit of time. They may give you a payment holiday or give you a way to lower the repayments.
Go for debt consolidation advice. You hear a lot about debt consolidation. Agencies want your business. Check them out. These credit counselors are certified professionals that know the debt game and the creditors. For a small fee, they can negotiate with your creditors to find solutions to the financial problem. If you are considering bankruptcy, debt consolidation may work as an alternative.
Sell stuff that you don’t want or don’t need. Ebay is a simple way to do this or maybe you can sell it through the paper. Taking stock of what you don’t want is also a perfect time to take stock of your financial predicament. With a smaller debt, you may be able to talk to creditors and make payment arrangements. Move into a smaller house if the kids have moved out. Liquidating your assets will probably occur if you file for bankruptcy anyway so take the initiative.
In short, get a grip on your incomes and outgoings. Get disciplined so that incomes exceed the outgoings. Take stock of your assets and sell those that you no longer need or can do without.
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