Some Ways to Avoid Bankruptcy
Before deciding to declare bankruptcy, seriously consider some of the following alternatives.
- Trim your budget everywhere you can. Make a list of your regular expenses and go over it carefully. Can you pack a lunch instead of buying one at work? Can you jog and work out at home so you don't have to pay for that gym membership? Can you get by with basic cable or network television or even no television instead of one of the more inclusive cable packages? Every dollar saved can be used to pay down your debts faster, preventing more interest from accumulating and being capitalized.
- Bring in extra money, if possible. Can you take a part-time job for a while, and put all of that income into paying off your debts? Do you have anything valuable to sell, like a vacation cabin that doesn't see a lot of use, or a motorcycle gathering dust in the garage?
- Talk to your creditors. Many banks and lenders will work with you to get your monthly payments down to a level you can afford, even if it means a higher interest rate and a longer repayment period.
- Negotiate with collections agencies. Although not great for your credit score, debt settlement is a valid and valuable method of getting out of debt while avoiding bankruptcy. If you can scratch together enough money — from family loans, savings, and selling something — you can negotiate debt settlement with collections agents.
Finally, remember that bankruptcy may be the best way for you to get out of debt, get creditors out of your life, and get a financial fresh start. A knowledgeable bankruptcy attorney can provide the guidance you need.