How Do I Avoid Bankruptcy?

Bankruptcy has become a modern day blight for Americans. People want immediate gratification. If they don’t have the money, they resort to using credit. Credit grows and grows and bills follow. For some people, bankruptcy is the only answer. Nevertheless, there are a lot of people who initiate bankruptcy before first attempting some simple remedies. The number one piece of advice that should be heeded is “Avoid Bankruptcy.”

Bankruptcy should never be your 1st choice. Although bankruptcy, as a debt remedy, can be considered a necessary financial move, it should be resorted to after all other alternative debt solutions have been exhausted. There are numerous critical negative consequences to bankruptcy, including the possibility of losing your automobile or home, an unfavorable impact on your credit report along with possible severe limitations to future credit. Even though bankruptcy has a number of positive aspects, it is wise to do everything in your power to avoid bankruptcy. Responsible financial management is the best approach towards avoiding bankruptcy. Fortunately, there are a number of ways to avoid bankruptcy.

The simplest and most effective way to avoid bankruptcy is to be financially responsible and living within one’s financial capabilities. If you maintain control of your finances, you will have no problem avoiding bankruptcy. However, if you’re already heavily in debt and facing insolvency, there are alternatives to bankruptcy. These include debt consolidation, debt settlement, and/or agreements with creditors. All of these alternatives should be seriously considered before the decision to declare bankruptcy is made.

Reasons To Avoid Bankruptcy

* Destroyed Credit History: One’s credit history is severely damaged by Bankruptcy. It stays in the Credit report for ten years from the discharge date and remains in court records for twenty years. The most undesirable aspect of having one’s credit impaired so severely for so long is that future prospects for credit-dependent loans and employment will be severely diminished due to the negative effect on one’s credit report.

* Repossession Of Property: The result of a b bankruptcy declaration can be the loss of assets of value (non-exempt property) or cash value equivalent.

* Tarnished Social Status: Bankruptcy (personal) can impair your social standing within your community and business relationships.

* Business Damage: Bankruptcy filing by a business proprietor can destroy opportunities for a growing business. The reason is that the impaired credit rating resulting from bankruptcy disqualifies him/her from obtaining business loans.

* Severe Financial Emergency: Upon being officially declared bankrupt, all of your bank accounts and credit cards will be closed. Whatever you may be leasing, such as your automobile will be delivered back to the owner immediately, thus causing a tremendous financial burden.

* Handicapped Life Prospects: Individuals that have declared bankruptcy might experience extreme difficult buying or renting a home or automobile, buying insurance and/or obtaining security clearance. This can lead to a lot of problems & put a big question mark on the chances of having a standard & secured living. Consequently, the best advice is to avoid bankruptcy altogether.

Whether or not to declare bankruptcy is a personal decision which only you can make. Bankruptcy is a serious matter and the record of it stays on your credit history for 10 years. Since there are several forms of bankruptcy available, it is advisable for you to consult with an attorney specializing in this field before proceeding. Some individuals are able to avoid bankruptcy through debt consolidation measures either on their own or with the assistance of non-profit credit counseling agencies.

Personal Bankruptcy – When to Consider It

Struggling with your finances is one thing. We all get those credit card bills that we struggle to pay off each month or a mortgage repayment that goes out late every now and again. However, the level of debt you need to have to even consider personal bankruptcy is huge.

The rule of thumb for deciding whether you need to think about personal bankruptcy is can you possibly do something to avoid the procedure? Can you reduce you monthly outgoings by doing without certain things, allowing you to spend more money on paying off your debts? Can you sell your house and car or downgrade to free up some extra money? Can you ask your creditors if some kind of agreement or repayment plan can be reached? All of these things need to be considered because a personal bankruptcy puts a serious black mark against your name.

Government legislation has changed the way many people look at bankruptcy with some seeing it as an easy way out of financial hardship. Yes, it’s easier to declare yourself bankrupt these days and yes, you could be discharged from your bankrupt status after a year or less. However, the same drawbacks still apply to a bankruptcy. You can expect to have you home, car and other assets liquidated in order to pay off the debts you’ve built up. You’ll find it near impossible to get credit while your bankrupt and things won’t get much easier for a long time to come afterwards. That black mark against your name will stick with you in some capacity for the rest of your life.

The major alternative to a personal bankruptcy is the IVA or Individual Voluntary Arrangement. This is an agreement between yourself and the creditors you owe money to. It’s a straightforward procedure and you can keep your home and other assets. However, an IVA won’t work for everyone because it still relies on the fact that you can afford to make some repayments. If you’ve lost your job or are unable to work then it’s likely you won’t get an IVA approved, leaving bankruptcy as your only option. However, if you’re struggling with insurmountable debt, then look into an IVA. Remember though, an IVA is still an insolvency albeit a slightly more preferable one than bankruptcy.

If you’re up to your eyeballs in debt and considering a personal bankruptcy then make sure you do your homework first. Analyse your outgoings against what you have coming in. Look at bank statements and see if there’s anyway you can balance the books more in your favour. Pick up the phone and ask your bank and your creditors for help. If you tell them you’re considering bankruptcy, they’ll listen to your problems because if you do end up having to take the procedure they won’t get their money back in full. It benefits them to arrange a repayment plan you can stick to. Don’t expect miracles but the agreement you arrange might be enough to save you from bankruptcy.