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You Can Avoid Bankruptcy With These Simple Steps
By Sam Paretta on August 05, 2009 |
Total Viewed: 120 |
| Post by : Jihoy Admin |
| Category: Finance |
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There are many Americans struggling with a lot of debt. Being in this situation can lead people to think of filing bankruptcy in order to get rid of debt. Yet bankruptcy should only be used as your last resort. When you have too much debt, is there a way to avoid bankruptcy by using specific debt management techniques and regain your financial footing?
Basically, the answer is yes. When you think about filing bankruptcy, consider first that you will probably not in most avoid, or eliminate, all of your debt. Some debt, like student loans and back taxes, can't be removed in bankruptcy. Also, if you have a job with income, you will most likely be filing Chapter 13 bankruptcy anyway, meaning you'll have to create a repayment plan to pay back your debts. As long as that's the case, why not set up your own plan outside bankruptcy? That's the question you have to answer for yourself.
To set up your own plan with debt management, begin talking to your lenders to see who is willing to work with you. If they know you are considering bankruptcy, they may have more incentive to work with you. Talk to your secured creditors first - the banks that have your home or car loans, for example. You don't want to lose your home or car in bankruptcy. Your unsecured creditors, like credit card banks, should get paid last. See who's willing to work with you on affordable payments. Also looks online for free debt snowball software or resources to show you how to negotiate with your creditors.
If you are without steady employment right now, this could be a situation in which you would benefit in filing bankruptcy. If you have no way to pay back your debt, then you need to file Chapter 7, where you can discharge all (or most) of your debts. Remember though that you may then have to sell your personal assets, like a house or your cars, in order to pay your lenders. Hope is not lost, though, as you might still avoid bankruptcy even without any income. Just take the time to work with your lenders and ask them if they are willing to give you a temporary hold o payments until you have work again.
The specific debt management strategies you should use are to cover all of your immediate personal survival needs, paying for food, shelter and utilities. Then, try to keep current on payments to your secured loans if you can. After that, use the cash you have left to pay what you can on the debts to unsecured creditors, which would be credit cards or unsecured loans. For student loans, these agencies will often work with you to put you on a hardship plan to temporarily hold your payments.
If any unsecured or secured lenders will not work with you, or if they begin collection proceedings, then you might be forced to file bankruptcy to stop them from getting a judgment against you. But that should be your last resort. Only use bankruptcy if there is no way you can repay your debts on your current income. Stick to your payment plans, and once you get on your feet you can increase your payments. |
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About the Author:
Want to know whether to take steps to (http://bankruptcy-help-online.com) avoid personal bankruptcy? Before you make the important decision about filing (http://bankruptcy-help-online.com) Chapter 13 personal bankruptcy, John Calhoun's credit, bankruptcy and personal finance blog, Bankruptcy Help Online. Get a totally unique version of this article from our (http://www.uberarticles.com/home.php?id=2146279&b=20988) article submission service |
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