How to Avoid Bankruptcy – Are There Alternatives?

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Debt, many people have it and are searching for a way out of it. Are you one of them? Well if so, filing for bankruptcy may have crossed your mind a time or two.

Filing for bankruptcy may at first look as an easy solution to your debt and credit-related problems; however you may not have to let your financial status come to that. Be aware that filing for bankruptcy will remain on your credit report for up to 7 years, sometimes longer.

Bankruptcy Repercussions

There are other ways to reach debt settlement, without resorting to personal bankruptcy, that will still allow you to retain a good credit score.

As previously mentioned, you need to keep in mind that filing for bankruptcy will remain on your credit report for up to 7 years or longer. As a result, lenders are also less likely to approve a loan for someone who has declared bankruptcy in the last two years of their application. Additionally, if you do manage to get approved, you will most likely receive significantly higher interest rates attached to your loan. Aside from the havoc, bankruptcy will adversely affect your credit score, not to mention your personal life by potentially adding stress to your marriage or relationship.

Prevention – Take Some Action

Now that we’ve established how detrimental filing for personal bankruptcy can be to both your professional and personal life, you probably want to know if there are any ways you can avoid it all together. Fortunately, there may be some steps you can take to prevent having to file for bankruptcy. These include:

  • Ask a professional counselor for help.
  • Negotiate with your creditors.
  • Address any and all of your debt problems as early as possible.
  • Set up and maintain a budget within your means.
  • Spend what you have wisely.

Where Do I Start If I Think I Need Help?

Take all the help you can get! Professionals in every field exist for a reason, including credit and debt counselors and, if it should come to that, bankruptcy attorneys. An added perk to conferring with credit counseling management providers is the fact that most of them offer a complimentary consultation. A credit counselor can help you identify ways to repair, monitor and repay debt on your own without having to declare bankruptcy.

Filing For Bankruptcy – No Easy Way Out

There are some preconceived notions about how filing for bankruptcy allows an individual to make a fresh start on their credit. This of course is a complete myth!

We have already covered the fact that it puts a huge damper on your credit score for one thing. On a brighter note, you can try discussing your financial difficulties with creditors in an attempt to negotiate lower monthly payments. For example, you may be able to work out a way to make less than minimum payment amounts for a short period of time.

Take Action Early & Stick To Your Budget

More often than not, simply identifying your debt problems early on can prevent you from having to file for bankruptcy later on. One way to ensure you will be able to spot any financial problems is to create a monthly budget report for yourself. You can always refer back to it in an effort to detect any potential financial trouble spots and address them before they get out of control.

One of the hardest things to do, which is staying on a budget is also one of the most effective ways to avoid bankruptcy. It’s no surprise that people have a hard time sticking to a budget; however this small sacrifice allows you to maintain a lifetime of good credit. It’s okay to splurge every once in a while, however most of the time, you have to be careful and limit your credit card purchases to necessities only in order to avoid piling on a mountain of unwanted debt.

Credit Counseling & Bankruptcy Attorney

If you want to get in touch with a credit counselor regarding credit repair, monitoring your credit report or any related subject, please complete our simple form.

If you want to consult with a professional bankruptcy attorney, that will be able to answer all of your questions, click here to find a bankruptcy attorney.

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