It has become a national preference to avoid bankruptcy. As a matter of fact, there are thousands of homeowners who face the situation of loosing their home possession due to high interest rate mortgage and the unemployment rates. Bankruptcy is not illegal but it is the last option that a debtor uses to get rid of all personal and business indebtedness.
Possibilities of Bankruptcy
One can take advantage by filing Chapter 7, 11 and 13 bankruptcy but these things will exert a long last effect on the future. This is because of the reality that bankruptcy leaves a black mark on individual’s credit profile for ten years and the person is enlisted as a default in many companies for future applications. This is necessary to understand how to avoid bankruptcy for those consumers who are facing financial crisis.
Financial crisis does not come all together in an overnight time. The debtor is responsible for his whole previous financial record based on the fact of unemployment, outstanding loan accumulation, extra and unnecessary expenses etc. All these situations arise from the bad habits of spending too much money on unnecessary things. Spending money freely without feeling any responsibility leads to the severe bad financial conditions. At the end, this irresponsibility pile up together and create a big hurdle for the debtor.
Few Steps to Avoid Bankruptcy
The step to avoid bankruptcy is to deduct all unnecessary expenses and manage the current budget and maintain it. Save credit card purchases for emergency, avoid unnecessary traveling and give up all unnecessary habits. Try to spend only on the important and basic needs. Make partitions of your budget and divide it in four basic categories these include food, clothing, transportation and shelter. Avoid purchasing new clothes in excess; don’t take lunch or other meals from outdoor, try to use economical transport.
Its a dream of every American to purchase and owe a home. But to fulfill this dream don’t think to take loan if you are unable to pay it back. If you have a better future plan and you think you can repay your mortgage wisely, then go ahead and opt better policy for you. You need to be serious with your planning in order to save money. Get stick with certain habits like cut out all the extra things from your life and leave your lavish living style only if you want save your self from bankruptcy. Don’t spend your precious money on buying DVDs, luxury items, eating out, expensive clothing, large phone bills, etc. Just ask yourself before buying any expensive item whether the purchasing of it will effect your budget or not, or is it really necessary for you to buy it or not.
Mortgage Companies are helpful to avoid bankruptcy
The second step you should adopt to avoid bankruptcy is search for expert’s help from credit counseling agencies, mortgage companies, banks and financial estate planners. They all can guide you to avoid bankruptcy and offer you best solutions. The consumer that is debited to pay total amount of 10,000$ is eligible for debt settlement. You can avoid bankruptcy even if you have low amount to pay off. This is possible by communicating with your mortgage company and tell them your actual financial situation. You can ask them to grant you some leniency to avoid bankruptcy.
Debt consolation is another solution to avoid bankruptcy. These consolidation offers are offered by various banks and financial institutions to add all outstanding loans into one bill that is paid monthly. You can avoid bankruptcy by applying for second mortgage to refinance your home. But don’t apply for high amount of loan that you can not repay easily.
To avoid bankruptcy there are many other ways which can be used. You can sell your jewelry, valuable assets etc. in auction to settle down all the outstanding debts. If anyone is drowning in the burden of outstanding loans, then a little wise planning with the guidance taken from professional and personal advisors can lead you to get financial success. It is only about understanding how to avoid bankruptcy by using all the available sources.