While filing for bankruptcy might seem tempting because it will erase your debts, it should be a last resort. Those who take this action will have a huge black mark on their credit. It is almost always better to try to pay off your debt rather than go down this path. This article will lay out some of the most effective ways to avoid bankruptcy. If it is at all possible, you should at least try.
Negotiate with Your Creditors
If you have not tried negotiating with your creditors, you will definitely need to do so right away. There is a good chance that they will be open to coming to an arrangement that works for both them and you. Whether it is getting an extension on the payback period or a lower interest rate, this is an option worth trying. The worst that can happen is that your credits refuse to budge. You have absolutely nothing to lose by doing this.
Take Out a Loan
As silly as it might seem, sometimes the only way to get out of debt is to take out a loan. A lot of people don’t do this because they don’t want to take on more debt. The fact is that a consolidation loan can really help you out a lot. In this situation the lender agrees to take on all of your debt, but you have to repay them over time.
You will have to repay the lender by a certain date. One of the great things about this arrangement is that your interest rate will most likely be lower. This should make it a lot easier for you to take care of your debt so you don’t have to file for bankruptcy.
Sell Your Assets
Nobody likes to even consider selling their car or house, but it might be necessary to avoid bankruptcy altogether. The first thing you want to do is to consider everything you own and determine what you can afford to give up. You should also think about cashing out on any stocks you might have. This could help you get by long enough to where you can avoid destroying your credit for a very long time. It’s never a pleasant thing to think about, but it can be an effective way to improve your overall financial situation.
Take on a Second or Third Job
You should also consider taking on another job part time to pay off your debt. It can be very physically and emotionally exhausting, but it’s better than going into bankruptcy. Sometimes you just have to push through for a bit to turn things around. In the end you will be glad that you decided to do this. The more money you have coming in, the easier it will be to keep your debt from completely spiralling out of control.
Refinance Your Mortgage
When you are in desperate need of money to keep yourself afloat, you might want to consider refinancing your mortgage. This can help you save quite a bit of money on your monthly payments. The more money you save on your mortgage, the more you will have to put towards paying off creditors. Depending on what your credit is like and the value of your home, you could get a pretty good deal.
Reduce Your Expenses
Sit down and take a long hard look at all of your current recurring expenses. It is very likely that there are some things that you could reduce or even eliminate for the time being. This could help you to save enough money to avoid going down the bankruptcy path. It might require you to buckle down and tighten your belt for a while, but it will be worth it in the end.
It is incredibly important that you decide which debts to pay off first. When you figure out which ones are most important, you can devise a plan of attack. This will make it a lot easier for you to get your finances sort out so that bankruptcy isn’t necessary.
Mistakes to Avoid
There are quite a few mistakes that you should avoid when trying to avoid filing for bankruptcy. People do all sorts of ridiculous things in an effort to avoid this, but you need to keep a level head. You shouldn’t pay for debt settlement services, as most of them just cause more harm than good. These services will most likely only get you deeper into debt, making bankruptcy your online viable option. Don’t get emotional when it comes to making these kinds of decisions. Instead you will need to think things about as clearly and rationally as possible. This will help you avoid doing anything stupid that you will deeply regret later on.