Three Tips For Avoiding Bankruptcy
When you are dealing with financial issues, it can be a time filled with stress and peril. You may be worried about how you will adapt and adjust. In this situation, you should make sure that bankruptcy remains an option -- but the last possible option that you consider before pulling the trigger on it. The reason for this is that bankruptcy can be very helpful in rebuilding your financial life, but has long-term ramifications on your credit score. So as opposed to making it your very first option, consider these tips below to help you avoid having to file for bankruptcy.
Tip #1: Consider What Assets You Can Attempt To Liquidate On Your Own
While asset liquidation is sometimes part of the bankruptcy process, you can also liquidate your own assets without having to file. Look into the laws of Chapter 7 and Chapter 13 bankruptcy in order to see what sorts of items you are able to have exempt from the bankruptcy process. Some examples of these items might include family heirlooms, household furniture and a pension plan. When you liquidate these items, you will have the opportunity to avoid some financial setbacks that can drive you to bankruptcy.
Tip #2: Consider Restructuring Your Mortgage Agreement
Dealing with a 30 year mortgage can be either a great investment or a hindrance to your financial life, depending on your ability to pay it. However, this doesn't mean that you need to sell your home or await foreclosure processes. Many lenders will be happy to renegotiate your mortgage in a way that is comfortable for you to pay it. It might end up being backloaded, meaning more interest or principal later, but the money that you save on the front end can help you to pay off other debts.
Tip #3: Ask For Help, A Payment Plan Or More Time
You would be surprised to find out how willing your creditors are to work with you if you just come out and ask. At the end of the day, they really want their money, even if it means receiving it with more time and patience. So if you ask them to put you on a payment plan, they will be much less likely to go after you through collections activities and other situations. Reach out to all companies that you owe to see what can be worked out.
Follow these three tips to avoid bankruptcy and don't hesitate to reach out to a credit counselor that can assist you.