Considering Bankruptcy? Know Your Options
If you have lost a job or have experienced a financial catastrophe, you might be worried about your ability to pay your bills, wondering how to avoid bankruptcy. Bankruptcy will leave a black mark on your credit report and will severely limit your options until you are able to rebuild your credit. That said, sometimes bankruptcy is the best option, but certainly not a choice to make lightly.
Consider bankruptcy only after a thorough investigation of all your other options.
This bears repeating … a thorough investigation of all your other options. The most common trademark of those faced with an overwhelming amount of debt is the tendency to ignore the situation. By keeping your head buried in the sand, you are only causing the problem to worsen rather than seizing the opportunity to change your fate. Embarrassment is the reason many people give for the failure to address their financial problems. Unfortunately, some people may attach a stigma to bankruptcy, seeing as a sign of moral failing.
However, is you want to avoid bankruptcy, avoiding the problem is the worst thing you can do! And keep in mind that several prominent Americans, including Mark Twain and Walt Disney, have claimed bankruptcy. Sometimes bankruptcy may be precipitated by an unforeseen job loss, divorce, or medical crisis. Other times it may be due to poor business decisions or financial negligence. Whatever the reason, avoiding the problem will only make matters worse. The most important thing you can do is to decide to fight back because you do have options, even in the darkest of hours.
To avoid bankruptcy, start by calling the hardship department for your bank. The incredible economic turmoil of recent months has lead to new priorities for the financial industry and newly available opportunities for you. Many banks are looking to work out alternative solutions instead of taking a huge loss. In the event of a bankruptcy, creditors will be left with nothing. Though lenders are not obligated to change the terms of your loans, by being proactive and asking, you might be able to work out an alternative payment plan or a loan modification to stave off bankruptcy.
In order to gain financial relief you might also consider consolidating your debts. Debt consolidation the combination of all your debts into one loan so that you make only one payment at a time. Depending on your circumstances, this can be a good way to regain stability and gradually repair your credit.
Despite your best intentions, it may be impossible to avoid bankruptcy in some cases, and that’s okay. In many cases, bankruptcy is the best option because it allows you to more quickly rebuild your life. Consider what will happen if you don’t declare bankruptcy. You might continue struggling to pay your bills for years. You will probably miss a lot of payments, have some bills sent to collections, and continue feeling a lot of anxiety. On the other hand, if you declare bankruptcy, you will wipe the slate clean and give yourself a chance to start anew. If you are trying to keep your head above water with a plan that is not working, bankruptcy might be preferable to more financial stress, harassing calls from collectors, and a burgeoning debt caused by an increasing load of interest and late fees.