Keys to Avoid Bankruptcy
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. One of the unfortunate bankruptcy facts is that bankruptcy will leave a black mark on your credit report and will severely limit your options until you are able to repair credit after bankruptcy. Though sometimes it is the best choice to handle your financial situation, bankruptcy should be considered only after a thorough analysis of all of your other options that allow you to avoid bankruptcy entirely.
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. You might also consider hiring a debt consolidation company, but be very careful or your money worries will be compounded by dodgy outfits that will rip you off.
Despite your best intentions, it may be impossible to avoid bankruptcy in some cases, and in others, considering all your bankruptcy options may be your best course of action. 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. In this case, it’s easier to wipe the slate clean and start over. Additionally, depending on the type of bankruptcy you file for, you may be able to hold on to property.