How to Thwart Bankruptcy

How to Thwart Bankruptcy

Bankruptcy is one glaring outcome of global recession and a condition that has affected millions around the world. Filing for bankruptcy may seem the easy way out of many debt-ridden situations. But, not to known to many, this is definitely not the best solution. Declaring yourself bankrupt will affect your credit scores adversely and in some cases, your property may also be confiscated. What is more, you cannot be sure that all your debts will be waived. So consider alternative options; ones that will thwart bankruptcy.

Improving your credit condition so that you can re-pay at least some portion of your debt, is the most feasible solution. For this, you can sell some of your assets or cut down your household expenses. These are drastic measures and will entail tweaking your standard of living, like doing away with satellite television or eating out less. But they are nonetheless, effective and will bring about some improvement in your bank balance.

If things look really downcast and you can hardly keep up even with the minimum monthly payments, then consider approaching a debt management company. They will in turn, get in touch with your creditors or collection agency to forge a debt consolidation or debt settlement scheme. In these choppy economic times, most creditors prefer reducing the debt amount, by as much as 40-60% than slapping a bankruptcy suit. This ensures that they recover some part of their loan.

You can also reduce the amount of minimum monthly payments if the interest rates are slashed. This is the goal of a debt consolidation program. Most such programs also waive the late fees and the over-the-limit charges so that your burden is lessened.

If you can figure out the best debt repayment arrangement for your situation, you can yourself get in touch with your creditors to negotiate. Keep in mind, declaring bankruptcy should only be your last resort.