People should avoid bankruptcy whenever possible. It is a life-altering experience that affects a person's credit history for years and can bankrupt emotions and self-confidence for a lifetime. Most people believe bankruptcy can wipe their financial slate clean. However, few people realize the underlying consequences and negativity associated with the bankruptcy process.
Options are available to avoid bankruptcy. One of the most efficient options is debt consolidation. Using debt consolidation to avoid bankruptcy can reduce owed debt by 40- to 60-percent and help individuals obtain a clean credit report once outstanding debts are paid in full.
When working with a debt consolidation company, credit counselors are available to help debtors create a workable budget. Counselors negotiate with the debtor's creditors and consolidate all debt into one manageable monthly payment. Debtor's make payments directly to the debt consolidation company which then distributes individual payments to creditors. Additionally, debt consolidation counselors work directly with creditors, relieving the debtor from collection phone calls and letters.
Oftentimes, individuals facing financial challenges can negotiate with creditors on their own. All that is required is a phone call or letter explaining financial hardship. It is best to offer a repayment plan and express willingness to repay the debt. Request a temporary reduction of monthly payments and a decrease in the interest being charged. Many credit card companies and lending institutions offer a hardship program. They would rather receive some money than no payments at all. By being proactive and asking for assistance many debtors can avoid bankruptcy and salvage their credit rating.
Another option to avoid bankruptcy is to sell valuable assets and personal belongings. Individuals who own two or more vehicles can eliminate a portion of their debt by selling all but one of their automobiles. People who own a house can sell their property and move to a more affordable home. Jewelry, heirlooms, collectables or recreational vehicles can be sold to pay-off outstanding debts.
Individuals can work a second job to avoid bankruptcy. If a family includes small children and childcare expenses prohibit a person from taking on a second job away from home, there are many telecommute jobs which allow individuals to work from home. These might include home daycare, pet-sitting, customer service and telemarketing work, or performing odd jobs for neighbors.
Depending on the amount of accrued debt, individuals might be able to avoid bankruptcy by reducing or eliminating unnecessary expenses. By taking time to thoroughly review where money is being spent, people oftentimes find multiple ways to save money.
There are many things people like to have, but don't actually need in order to survive. These include items such as cable TV and premium channels, extra phone add-ons such as caller ID and call waiting, cell phones with unlimited text messaging or high-speed Internet service. Grocery bills can be slashed by buying in bulk, taking advantage of sale items and using coupons.
Utility bills can be reduced by taking shorter showers, using energy-efficient light bulbs, changing heating and air conditioning filters on a regular basis and investing in thermostats to reduce usage during hours when the home is unoccupied.
Excessive debt can be overwhelming and bankruptcy may seem like the only available alternative to dig out of the hole. However, bankruptcy should be considered only after all other options have failed. Before making this life-changing decision, pursue all available options to avoid bankruptcy and investigate every possible strategy.
Published on July 03, 2008 at 07:40 PM | Comments: 2