Bankruptcy is the state of being declared unable to pay your debt. Filling for bankruptcy is mostly viewed as a technique of running away from your debt. Although it may chase away some of the collectors you owe, you may end up being followed by legal charges especially in the U.S.Therefore it’s in your best interest to avoid being declared bankrupt or filing for bankruptcy at any cost. This will help you to avoid the consequences of being declared bankrupt such as attending compulsory counseling’s and attending obligatory classes on financial management. Below are some of the ways that can help you avo
id bankruptcy.
Settle With Debt Collectors and Creditors
As stated earlier you can only be declared bankrupt if you are unable to settle your debt. So the best way to avoid this if you are unable to pay them is to settle. Debt settlement or arbitration is a financial agreement between you and your creditors or debt collectors where you agree to pay less amount in full than the amount you were supposed to pay.
Also, if you have to settle make sure you settle the right way. Therefore, don’t use debt settlement companies since it will cost you a lot of time and money. It’s also important to note that you should avoid settling if your loan repayments are on time. Lastly, you should be ready to pay the agreed amount as soon as the debt settlement agreement is struck.
Selling Your Assets
This is another way that will go a long way in helping you avoid bankruptcy. Selling or liquefying your assets will help you to generate quick cash which you can use to pay your debts. This means that you have to take this action on time that is, once you have realized you are unable to pay the loan but still when the loan repayment period has not passed. This will help you to avoid legal actions by the creditors or debt collectors, and furthermore, it will help you to avoid being declared bankrupt.
Cut Your Spending
When you are in a financial crisis such as being unable to pay your debts cutting your spending is one of the prudent things you should start doing. In fact, it will help you to figure out the amount of money you usually spend and hence help you to come up with a financial plan that may help you pay your debts. This means you have to move to a cheaper apartment, do away with vacation and many other luxuriant things. By so doing you may end up generating enough money to pay your debts. Also, cutting down your sending helps in avoiding debt consolidation which may end up landing you in even more troubles in the future.
Seeking for Professional Help
For example, you may seek consumer credit counseling. Therefore if you are having a hard time settling or consolidating your debt with the creditors or collector on your own, you can seek for professional help. A debt counselor can help you to come to a debt management plan with the creditor that may help you to pay your loan within an additional span of three to five years.
