A Quick Guide to Avoid Bankruptcy
Get Your Finances Under Control. There is an Alternative to Bankruptcy.
How do I avoid bankruptcy? Is there an alternative to bankruptcy? Avoiding bankruptcy is possible. It might not seem like it if you feel like you’re overwhelmed with debt, but you usually do have some options.
Bankruptcy should be a final resort. Before you make that step, take the time to consider any reasonable alternatives to bankruptcy.
While it would mean getting a financial fresh start, bankruptcy has significant effects on your life after you are discharged. It may affect your credit score and your ability to get a loan in the future.
You have several bankruptcy alternatives that should be considered before you figure out what the best option is for you.
1. Consult with a licensed insolvency trustee.
This should be the first thing you do, regardless of what option you are going to take. When it comes to avoiding bankruptcy, it is essential to get the help of a professional who can prevent you from taking unnecessary financial risks.
Your licensed Niagara insolvency trustee will help you figure out just how bad your situation is, and go through some of the debt management options available with you. They can help you create a plan for becoming debt-free and can help you understand your situation better.
Book a free consultation with a trustee for initial advice to begin the process before you do anything else.
2. Debt Settlement and Consolidation
Your licensed insolvency trustee will help you figure out if you can create a debt settlement plan based on the money you owe and who you owe it to. If you can manage loan payments per month, this might be an option through your financial institution.
Debt settlement involves negotiating with your creditors to create a different payment schedule or, in some cases, delaying immediate payments in favour of larger ones down the road.
It can bring you relief from high interest rates and requires budgeting help.
Debt consolidation means taking every bill and debt payment you owe and putting it into one new loan. It involves working with creditors to have them agree to either waive or lower interest rates based on what you can afford to pay per month.
3. Budget and Plan
Sometimes being able to pay off your debts just requires a reorganization of your budget and the creation of a financial plan to get you back on track with your loan repayments.
Figure out how much you need to pay back each month, then how much your living expenses are, and base a financial plan around these numbers. Sticking to this budget will allow you to make your payments every month without worry.
Creating a budget allows you to see the areas of your life that you could save money and use that money to go toward your debt payment. Living according to this budget means that you may have to make some sacrifices, like giving up your daily Starbucks habit or cancelling your cable bill to pay for electricity.
This might also mean some bigger sacrifices are necessary, like giving up your car and taking the bus instead or finding another job.
Sometimes if you have a useful hobby you can turn this into a way to make some extra cash to help pay off your debts.
Taking on extra work or another job will require a sacrifice of your free time, but it is sometimes the only debt management solution in sight before you have to turn to professional help. Think of it as a temporary situation until you’ve finished paying off your loans, bills, and debts.