Tag: bankruptcy

Should you file for bankruptcy or not? This is a decision many are wrestling with. The truth is, you probably have more options than you realize. Here are six of the best:

#1) Negotiate

Initially, you should call up the companies you owe money to and attempt to arrange an alternative payment plan. In many instances they will be willing to work with you.

#2) Hire a credit counsellor

This is more effective than the first option, unless you are a master negotiator. Sure it’s more expensive, but it’s usually much more effective. And in most instances your creditors are more willing to work with a legitimate company than an individual.

What will they do for you?

They basically help work out a more favorable repayment plan. But in most instances these firms will only deal with unsecured obligations.

What’s a “more favorable plan?”

They generally attempt to do either one of three things: get the grand total reduced, get better interest rates, or lengthen the amount of time you can pay it back by. All of these will make the payments easier to deal with.

How do the counsellors determine who they will work with?

They will want to know how much money you make. They have to know this to figure out if it’s possible for you to pay off your debts with the new terms.

So if they decide not work with you, do you have to file bankruptcy? Not necessarily. There are still more options.

#3) Get a debt consolidation loan

This is where you take out a loan for the amount of your home’s value in order to reduce your debt. Obviously you stand to lose your house if you can’t pay your debt. Therefore you need to think long and hard about this. It is worth speaking to a certified professional before making such a big decision.

For some, having a monthly loan payment is much more manageable than credit card debt. This is because the interest is applied all at the beginning, so it doesn’t keep accruing.

#4) Lower your expenses

This is the simplest and easiest method. Just take a very close look at where your money is going.

Check your credit card for the past month and notice the charges. Cancel any monthly payments from companies you aren’t using. Chances are, there are more than a few in this category. Focus on the big expenses, because those are the ones that are making the most difference.

#5) Sell nonessential items

Think about getting rid of that second car you own. Consider taking out the money in an investment portfolio and using that to pay things off. Sell your TV. All these things can make a big difference.

#6) Get a loan from a loved one

This is obviously not a good option for everyone but in some cases it may be the right thing to do. Only you can decide for yourself. Just be sure you have done your research carefully before you make your decision.

FURTHER READING:

How to Raise Cash Quickly

How to Earn Extra Income Online

Bankruptcy – Things You Need to Know

Are you considering filing for bankruptcy? Before you do, here are some very important things you must know.

Don’t make the decision rashly.

Make sure you take time to educate yourself about the proceedings. Bankruptcy will impact your credit for ten years down the road, so it’s by no means the “clean beginning” many view it as. And in some instances you still have to pay off your obligations.

Before you decide, you need to figure out what possessions you will be allowed to retain, which ones will be liquidated, etc. In some instances you might even lose your job. You need to factor all this in.

What chapter will you file for?

This is the first thing to think about, and it makes a big difference. Should you be earning higher than the average income of a comparable family in your state, you won’t be allowed to go for chapter seven.

This is where your debts are completely wiped out, and is obviously the one most people would prefer. Your only choice would be to go for chapter thirteen, which is a repayment plan. This is mostly because you have the income to make it work.

In this case you are given a trustee who determines which of your things must be liquidated in order to cover your obligations. In most instances you can retain your residence, but some areas will take this as well.

But you might not have to file.

First you need to think over your money situation long and hard. In many instances there are options. Think about whether you have sufficient cash flow.
If you are only able to make the lowest payment possible, and are constantly using your credit card because you don’t have money available, bankruptcy may be something to consider since sooner or later you are going to run out of credit line.

If things are still relatively manageable, here are three effective alternatives to bankruptcy:

#1) Track your spending

Take a long and hard look at your spending habits. This shows you the primary places where your money is disappearing. This will help you figure out where you need to get it under control.

#2) Get credit counselling.

This sometimes helps you lower your obligations. But these companies will only work with you if you have a certain level of income.

#3) Get a debt consolidation loan

In many instances getting a secured loan against your home is smart, because this will give you the cash flow you need to pay down your credit cards. The risk, of course, is that your home will be repossessed if you can’t make your payments. But if you’re sure you can make the repayments and are committed to it, this may be a smart option to consider.

The bottom line is that bankruptcy should be your last resort if you have no other options. Therefore, leave no stone unturned in your effort to avoid filing for bankruptcy, in order to take control of your financial future.

FURTHER READING:

How to Raise Cash Quickly

How to Earn Extra Income Online