How to Avoid Having to File for Bankruptcy
Bankruptcy occurs when a business or individual accumulates such a large amount of debt that there is no way for them to recover from it. In many cases bankruptcy can be avoided if action is swift and responsible measures are taken. Unfortunately, there are some cases in which a company is left with no choice but to file chapter 11 bankruptcy, or an individual to file chapter 13. Bankruptcy laws are put in place to protect creditors as well as consumers in the event a business or individual should go under financially. There are a number of ways in which a person may avoid having to file for bankruptcy and some of the following are some of the most popular.
Evaluate and Sell Assets
Before getting to the point of bankruptcy it may become necessary to sell off some assets in order to pay off certain debts. No one likes the idea of having to sell valuables or real properties in order to rescue themselves financially, however, in some cases there is little choice. Make an inventory of everything you have that may bring in a profit and then begin evaluating ways in which you may sell those items. There are excellent avenues available online for people facing personal bankruptcy. Sites such as e-bay, Amazon, and Craigslist will assist you in selling practically anything of value you may have. Many people are surprised by the actual value of things that have had lying around in their homes or businesses for years.
Earn Extra Income
This many sound easier than done for someone who is up to their eyeballs in debt, however, there are a number of ways in which you may be able to use some of your skills in order to bring in a little bit of extra cash. There are many things that can be done online to earn extra money such as content writing, ad networks, and a plethora of other things that can help a person bring in a much needed cash flow, in order to pay down some debts. In addition, there are always a number of “gigs” listed in craigslist and other such sites that can bring in some additional revenue in times of trouble. Depending on how much debt you have accumulated, you may be able to earn just enough to begin paying off debts one by one. Obviously, this is a step that should be taken early on and is not necessarily designed for someone who has thousands of dollars in past due bills.
Request Help From Creditors and Debtors
Often, asking for a little assistance in terms of payment arrangements can help a person slowly pay off debts without having to go to the poor house or file for bankruptcy. In most cases, businesses are more interested in getting the money that is owed to them than having to file court injunctions and ultimately taking losses. For this reason they may be more inclined to set up some sort of easy installments in order for you to be able to pay off your debt at a bit of a slower pace. Communication is key in any business arrangement so do not fall into the trap of hiding from, or avoiding bill collectors. This only complicates financial issues further. In addition, borrowing money from a friend or family member may be a good solution whenever possible.
Aside from the aforementioned measures, there is always debt consolidation to consider. There are many companies that specialize in helping a person or business get out of filing bankruptcy by helping them compile all of their debts into a brand new loan with just one monthly payment. This is a very effective method of paying off existing debts and coming up for air, so to speak. Research the different companies, as well as the types of debt consolidation loans they provide and the various interest rates.