How to Manage Personal Finances to Avoid Bankruptcy

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How to Manage Personal Finances to Avoid Bankruptcy

Most people would prefer to avoid bankruptcy, the most harsh debt relief option, at all cost.  Sometimes, bankruptcy is unavoidable, due to serious unexpected financial hits that you don’t have the resources to deal with yourself. But often, smart financial management can help you address financial problems before they become so great that bankruptcy is the only way out of the situation. This article will give you some tips on how to avoid bankruptcy.

Tips to Avoid Bankruptcy:

1.   Cut back on unnecessary luxury expenses. If a lifestyle you cannot realistically afford is causing you to get deeper and deeper into debt, cutting back on items or subscriptions you don’t really need can help you avoid bankruptcy.

 

2.  Make a monthly budget and stick to it. Balance your expenses against your income, and if at all possible, put some money aside every month for unexpected expenses.

 

3.  Pay your bills on time. Many people, who file bankruptcy, do so after a long debt cycle during which unpaid debts gather interest and late fees, thereby increasing the amount of debt. This means that even if you’re not actively spending money, you’re passively increasing your debt.

 

4.  To avoid bankruptcy, consider minimizing the use of your credit cards. It’s attractive to pay with your credit card if you really something, but the bill has to be paid sooner or later and the money has to be there. A good rule to live by to avoid bankruptcy is: if you don’t have the cash, the item stays in the store.

 

5.  Consider other debt relief options. There are a number of solutions available in order to avoid bankruptcy. Depending on the amount and type of your debt, you may qualify for debt settlement or debt consolidation.

 

6.  Restructure your existing loans. Most lenders will want to help you avoid bankruptcy, as it minimizes their chances of repayment. If you have a mortgage, schedule a meeting with your lender to renegotiate new terms on the loan. A longer time period, a reduced interest rate, or both, can lower your monthly expenses and enable you to manage your total expenses.

 

7.  If you have valuable assets, consider selling them. A trustee taking control of your assets and selling them in order to pay off your creditors is a result of bankruptcy you want to avoid. Bankruptcy doesn’t allow you to have control over the price paid for your assets. Selling anything of real monetary value you own to settle as much of your debt as possible will help you avoid bankruptcy. If, after this, you still can’t avoid bankruptcy, at least the balance of your debt will be lower.


About the Author:
The writer is professional bankruptcy lawyer and regularly writes on bankruptcy correlated issues like short sales, loan modifications. His suggestions and views mostly on Bankruptcy are based on his professional experience. If you are looking for more information on to Avoid Bankruptcy, Bankruptcy Lawyer, Bankruptcy Attorney, Chapter 7 Bankruptcy, Personal Bankruptcy, Chapter 13 Bankruptcy and Filing Bankruptcy visit our website http://www.bankruptcybalance.com.
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