When you are in the most unfortunate situation of your life – having debts by different creditors – you might think of the term ‘bankruptcy’. Based on common wisdom, most people think that bankruptcy is their alternative that will just simply eliminate all of their bills – so that they can start their financial life all over again. Well, this is very inaccurate, most especially the ‘simple part’. It is important to take note that bankruptcy is far from simple. It is true that there are a lot of do-it-yourself kits that you can find right on the market, showing you how to easily file bankruptcy from the comfort of your home. On the other hand, they will not tell you that you might not even be approved to file.
Also, bankruptcies can stay on your credit report for a very long time (7 to 10 years), and affect things, like buying a car, home or getting a loan. The good news is, a bankruptcy can be removed if it stays on your credit longer than expected, visit http://deletingdisputes.com/remove/fast to find out more information about debts & credit reports.
What is Bankruptcy?
In the nutshell, bankruptcy refers to a situation where you reorganize your bills, because you’re overrun with debt. As mentioned earlier, when filing for bankruptcy, the credit report companies will report it, and it will have an adverse effect on your own credit score. For those who have a history of bankruptcy, chances are, they will not able to easily get mortgages and other types of loans (whether it’s secured or unsecured ). Since the negative effects of a bankruptcy on your credit report will last a long time, one should do everything in their power to avoid bankruptcy, in the first place.
Carefully Analyze Your Own Expenses
The first thing that you must do in order to avoid bankruptcy, is keep a sharp eye on your expenses. Some of the expenses might seem very insignificant, but they can still add up to a huge amount of money. The food that you purchase every day (on your way back from your work), may be costing you big bucks each month. There are a lot of expenses which, in the first place, are unnecessary, but still many people bear with them – mainly because (individually) the bills seem very small; but a closer inspection will not only tell you which expenses are taking up most of your budget, but it will also help prevent you from over-spending. And some of the expenses you overlook, may have been erroneously charged to you, in the first place (needlessly taking up more of your money); to thwart this, learn how to do a Transunion Online Dispute to remove erroneous debts form your credit report(s).
Cut Your Spending
Putting the budget together is one of the easiest and most convenient ways to get a handle your own spending habits. You can cut your own credit cards immediately, and then pay (in cash) all the purchases that you will make. If you think you cannot afford to sustain your kind of lifestyle on all-cash, the best thing you should do is to downsize your lifestyle. This may include both the small and big stuff – every penny counts. The following are some of the things you can downsize on:
- Skip going on a vacation.
- Sell your recreational vehicle, motorcycle or boat.
- Drive in an older (or less-expensive) vehicle.
- Move to a smaller house.
As far as amenities, you must eliminate any spending beyond transportation, shelter, clothing and food. This includes the following:
- Dining out
- Cellular telephones
- Visits to the spa
- Gym membership
- High-speed internet (..Ok, maybe that’s taking things a little too far, keep the high-speed internet.)
Aside from that, gift giving during the holidays can also be eliminated. Spend time with the ones you love, instead of spending your money.
Take Loans From Friends and Family
Most individuals do not like to admit their own financial difficulties, right in front of their friends and family – so, asking for loans (from them) could pose a challenge. But this doesn’t have to be case. If your circle of loved-one are as supportive as you believe them to be, then you can take comfort in the fact that no one is going to mock you, for asking for their help.
It might be a blow to your pride, but it will surely help your dire financial circumstance. Firstly, family members (or friends) are less likely to ask for interest. Secondly, they will never pursue debt the way most creditors do – if a loan agreement between you and a loved-one becomes a legal matter (in small claims court), you still can exercise your consumer rights; go to http://deletingdisputes.com/remove/quick to learn more about the federal laws surrounding debts and consumer rights.
Selling something is one of the best ways to raise money (in time of need). Through selling different items (or assets), you can absolutely get the amount of money you need, without even sacrificing your own pride. Otherwise, if you file for a bankruptcy, you are more likely to lose your own non-exempt assets (assets that you MUST sell during bankruptcy, in order to pay creditors). Why not sell them and avoid filing for bankruptcy, altogether.
On the other hand, if all the assets that you have are exempt, then bankruptcy is the ultimate source of action. In this case, bankruptcy will eliminate your own debts, and you will be allowed to keep your own valuable property!
There are many ways on how to avoid bankruptcy. On top of that, one must weigh their finances carefully, to avoid living beyond their means and exhausting their resources.