Bankruptcy is something that everybody wants to avoid. When we all start off as bona fide members of the financial world with our first credit card or bank account, the future usually looks pretty rosy. We start earning a little bit of money, putting some money away in our savings, and making purchases on credit.
However, for some of us, over time the credit purchases we have made can start to add up at a rate much faster than our ability to pay them down. It's essentially a cash flow problem, with our cash coming in at a lot slower rate than it is going out.
Here are 9 tips to avoid bankruptcy:
1. Sells assets and use the money to pay down debts:
Look around your home: many of the items around you may be less valuable to you in their current form than if you were to convert them to cash by selling them. Use the money to pay down your highest-interest debt first.
2. Ask your creditors for their help in reducing your monthly debt payments:
Contact your creditors - especially your credit card companies - and ask them if they would be willing to reduce your monthly payments due to them. Ask about any hardship programs they offer.
Professional consumer credit counselors make it their business to help people facing possible bankruptcy. Many of these services cost a small fee while some publicly-available services are free.
4. See if borrowing from family and friends is an option:
Normally, you probably want to avoid borrowing from family and friends. However, this is a particularly tough time in your life. You may want to muster up the courage and ask for some money to help you through this.
5. Try debt settlement:
This is where you negotiate with your creditors to reduce your debt by 40%-60% of whatever your current outstanding balance is. Again, these companies would rather get something than nothing: if you "go BK," they stand to get not a penny more from you.
6. Work to raise your credit score:
Check your credit report for glitches and misreported items. Report any such items you find. This is an excellent way to quickly boost your credit score.
7. Keep a good relationship with your bank:
Any way that you can show you are a financially responsible person should be a feather in your cap in the eyes of creditors. As one step, keep a checking account in good standing. If your bank has closed your account, look into applying for an account with a second chance checking bank.
8. Avoid making credit card purchases:
Cut out all credit card purchases. Switch to cash. This is the first step toward reducing that ominous credit card debt.
9. Put any additional money you are able to make toward paying down your debt:
If you find a way to make extra money - such as through an additional job - put every penny toward paying down that outstanding debt. Visit site.