6 Tips to Avoid Bankruptcy

Living through financial difficulty is one of the harshest things a person can go through. Sadly, this is something that most people will face in their life at some stage. Still, there is a big distinction between experiencing a mere financial roadblock and struggling with long-term revenue deficits and severe debt. If you face the latter, you will have difficulty buying things that others take for granted, such as getting a roof above your head or being able to cook nutritious meals.

Bankruptcy is a perplexing action to consider. Although it often results in successful debt relief, it may have drastic effects for your credit record up to ten years since the finalization of the bankruptcy. An individual should then only file if it is absolutely required. Given the significant effects of bankruptcy, including collateral damage and the effect on the reputation, this should absolutely only be viewed as a last resort. Below are few ideas to better protect against bankruptcy.

Cut Spending

The first step of the transition is finding out how much money you make per month. The fastest and simplest way to keep a grip on your financial patterns is by placing a budget together. The next move is to reduce expenses. Immediately stop using credit cards, and use cash for as many transactions as you can. If you can’t handle an all-cash existence to support your lifestyle, the next step of your initiative will be to downsize your lifestyle.

Maximize Income

Even if you have reduced your expenditures, you may not receive enough income to cover all of your living expenses. If this is the case, then it’s time to increase your income. The clearest way to achieve so is to find a strong career path. If this is not enough, you may want to take a second or third job. The same holds true for your partner.

Negotiate with your Creditors

So soon as you know you can’t fulfill your monthly payment commitments, you can notify your creditors, Bauer-Simmons said. There is no guarantee, but in some cases creditors agree to lower interest rates, change the terms of payment, or lower fees. “Some income is safer for the credit card firms than no income,” said Bauer-Simmons. If you are bilingual or prefer to speak Spanish only, you can consult with Spanish bankruptcy lawyer Walter Benenati in Florida to help you go through the process.

Avoid debt settlement services

Debt arbitration programs are provided mainly by for-profit firms and pay a premium to reach a deal with the creditors. Some firms pay for the payments up front, according to Consumer Reports, and these may reach up to 15 percent of the debt’s overall value. And in most situations, according to User Surveys, the businesses give no substantial relief from the debt problem to their customers.

Consider Getting a Second Mortgage or Reverse Mortgage

If this all fails to operate, another potential solution may include a reverse mortgage. If getting a reverse mortgage wlil get you out of debt and bring you down the track to a healthier financial situation, it might be worth it. You’re basically placing your house “on the table” for this decision and it’s not to be taken lightly. You should definitely consider this option closely. If you default, or start racking up more loans, it may have severe repercussions.