Is it Possible to Avoid Bankruptcy When Business is Plummeting?
Due to the uncertainty of life, you might find yourself in debts that are no longer manageable. While the experience can be stressful, it is not the end of the road for financial success. Bankruptcy is the legal process that you follow when you cannot repay debts to creditors. It is a way to seek relief from your debts. A debtor activates the bankruptcy with the help of a court order. This process might be a getaway ticket for many people, but on the other hand, it has tremendous consequences. For instance, it goes to your record, and it can be difficult for you to obtain loans and credit. Therefore, this article discusses the alternatives you can take before declaring yourself bankrupt.
Selling Your Assets
Most of the time, selling whatever you have is the quickest resort to clearing your debts. Once you notice your debts have started overwhelming you, you should take action to lighten the burden. Being behind payments gets you in trouble with your debtors. There are options to consider when settling your debts, like selling your jewelry, furniture, and even electronics on Craigslist, eBay, or even your front yard. It might be hard for you to live without things you are attached to, but you have to adjust. By avoiding bankruptcy, you can eventually get back to your feet and buy again.
Seek Guidance From Creditors
You might not be comfortable negotiating your creditors or collection agencies, but it might just be the best option you have. It's recommended that you let your creditors know when you are facing a financial crisis and wish to avoid bankruptcy. You instead give your creditors some money rather than no money at all. Show them your urge to pay and ask them to help you find a solution like lowering your interest rate or monthly payment. If you do not dare to face them, you can seek assistance from a nonprofit credit or debt counseling agency for more info on how you can work your way out of debt. Such agencies have the necessary insight that can help you in times like this. The advice and assistance they might offer can be of help, even in the future.
Try Limiting Your Budget
Have you considered cutting off the not so important things you use daily to help pay off your debts? Reconsidering your budget enables you to eliminate the nice to haves like mobile phones, satellite television, cables, and landlines. Expenses like these can be reduced without any repercussions. Limiting your budget is better than the implications you would face after a bankruptcy.
Consolidate Your Debt
Debt consolidation is a way of taking a new loan to clear your debt and other liabilities, especially unsecured ones. Consolidation could be a loan from your loan from a bank or credit union. The success of this alternative depends on your financial situation and the type of consolidation to be considered. It provides you with a near term relief as well as reducing your monthly payments. Using a debt consolidation loan helps you repay all your outstanding debts. It might not have solved any problem, but weighs down the burden of paying multiple debts. However, it makes it easier and flexible to pay one institution over various institutions.
Seek Help From Friends and Family
Often, financial advisors discourage the borrowing of money from family and friends because money can complicate relationships. Bankruptcy is an exception. Have your time to calculate how much money you need as you draw a plan. Know the amount you can raise, bring your family and friends on board, and ask them if they can help you make a difference. Always create a payment plan of how you will repay them as soon as you gain back your positive financial track.
Do Not Do Anything
Taking no action at all is another approach. It is practical to those leading a simple life and little income. This makes you judgment proof. You can be sued, but the person who gets a court judgment will not be able to collect anything from you since you have nothing that can legally be taken.
Before you take a step in declaring yourself bankrupt, always try considering the impact it might cause both in your business and personal life. Finding a solution ahead of the problem is a good start because it might just save you a lot, from your assets to your freedom. Your debts might be written off, but might experience substantial continuous challenges while dealing with financial institutions.