Friday, October 15, 2010

How to Avoid Bankruptcy

Is it possible to avoid bankruptcy? Many people are not beyond help so if you have been thinking of this course of action, do not think of filing for bankruptcy until you have tried these steps.  Bankruptcy is the last action you should take as it will affect the rest of your life.   


Set up a budget.  When you put your financial details down on paper it is probably the first real picture of your finances that you have had.  Am I right?  A budget focuses you on your situation which can be scary but it is necessary as you need to see where you are spending your money.  Only then can you can see where you can make changes.  Are you are living beyond your means? 


Read here>> for tips on setting up a budget to avoid bankruptcy.


List your debts. This list must have the amount you owe, the payment amount, the interest rate.  List them in order of highest loan and highest interest rate.  The highest interest rate debt should be paid first.  Make sure all debts are paid on time and with the minimum payment.


Plan a repayment strategy using your budget and your listed debts.


Change your discretionary spending habits. Until you did your budget you may not have been aware of the sort of money you were spending on things like coffees, lunches or drinks after work.  If you have been considering bankruptcy you know you must make changes.


Meet with your lenders.  Be open and honest and show them your budget and your planned repayment strategy.  Negotiate a structured repayment program with them.  They may reduce the interest rate or the required repayment amount.  


Work out how to get extra cash.  Delve through your closet, search your attic, hunt in the garage.  Put all those unused items aside and sell it at a yard sale. Find a part-time job. Think outside the square.


To avoid bankruptcy you need to acknowledge your situation, focus on what you can do not what you can’t do and take action

1 comment:

Bennie Sawrey said...

I like the idea of managing the payment of your debts. I think patience is a factor here, since the financial crisis is really hard to deal with. I also think that it's best to deal with debts, starting with the smallest ones.