4 Tips to Avoid Bankruptcy
Everyone dreads filing for bankruptcy. In fact, it’s one of the words that’s mentioned in a hushed tone as it is a scar on your reputation. This is because bankruptcy can turn your life into a living hell. Once you have filed for it, you feel like your life is worthless. Maybe that’s why some folks even commit suicide to avoid being torn apart by bankruptcy. The most annoying thing about filing for bankruptcy is th at everyone and their mother will know about your financial status. This is because your status will be published in the public domain for all to see. But it seems like the only way out for those who are burdened by debts. Fortunately, there are things you can do to salvage the situation. Here is a list of the tips that can help you in avoiding bankruptcy.
- Clear Your Debts
Debts can really ruin your reputation. For a start, they cause your credit score to drop drastically. With a poor credit score, it’s not easy to get a loan or buy anything on credit. This is because bankruptcy simply labels you as an individual who can’t afford to pay for anything. If you have some pending debts, you should consider paying them partially so that you reduce your chances of being declared bankrupt. You can actually start paying debts that are not too huge and focus on the rest later. Besides that, you should consider requesting your creditors to extend your repayment period.
- Sell Some of your Assets
Disposing of your assets can earn you the money you need to clear your debts. If you own an old house, you should consider selling in the property market. But you might have to do some minor repairs to improve its appeal. This is because maintenance is less expensive than replacement. Besides that, you should consider selling your car and home appliances such as fridges, cookers, and AC. In fact, you can do a garage sale in your neighborhood or sell them on eBay or Amazon and fetch good returns.
- Ask Friends and Family to Loan You
A friend indeed is a friend in need. When you are going through financial problems, the majority of those you regard as friends and relatives will drop you like hot metal. They will actually avoid you as much as possible. They will not answer your calls, texts or emails. It’s only your true friends and relatives that will be there for you when you are going through hell. You should, therefore, consider asking such relatives and friends to help you out by lending you the money so that you can clear your debts. But you must first have a plan of paying them back later to avoid ruining the bond you have with them. Keep in mind that the majority of relationships go soar due to issues that revolve around money.
- Cut Back on Expenses
When you are on the verge of going bankrupt, you just have to minimize your expenses. The advantage of doing this is that you will be able to save money that you can use to offset your debts. Here is a list of ways of reducing your expenses:
- Shop with coupon codes
- Share rides on Uber and Lyft
- Watch movies at home
- Avoid eating out
- Don’t go for vacation
- Live in a small house
- Drop gym membership and magazine subscriptions