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How can you avoid filing for bankruptcy?

| Nov 21, 2018 | Avoiding Bankruptcy

If you are currently living with overwhelming debt in Florida, you may worry that bankruptcy is your only debt relief option. Fortunately, it is not. While there is nothing wrong with filing for bankruptcy, according to U.S. News – Money, many people often consider it one of the top five life-changing adverse events a person can go through in his or her lifetime, along with disability, severe illness, divorce and the loss of a loved one. If you are one of these people, you may want to know what you can do to avoid bankruptcy but still get your financial life back on track.

U.S. News suggests a few different tactics you can use to get control of your finances without having to file for bankruptcy. One tactic involves selling your property. If you were to file for Chapter 7 bankruptcy, the bankruptcy trustee would liquidate your assets to settle your debts anyway. You can avoid bankruptcy by selling your assets yourself and using the proceeds to pay off creditors. By doing this, you can possibly avoid having to liquidate those assets that mean the most to you, such as your home, fine art or heirlooms.

Another way in which you can avoid bankruptcy is by negotiating with creditors to devise a reduced payment plan schedule. You can hire a debt settlement company to negotiate on your behalf or you can do the negotiating on your own.

U.S. News also suggests borrowing money from family and friends. Though it takes a lot of pride-swallowing to do so, if the amount you owe is not too outrageous, and if you are good for your word, it may be the cheapest and most effective way to get out of debt without having to file for bankruptcy.

You may also want to reconsider restructuring your mortgage. There are two ways in which restructuring your mortgage can help you. First, you can refinance your mortgage, which may mean applying for a lower, adjustable interest rate extended over a longer period. You can then use the money you save up front to pay back your debt. The second approach is to negotiate with your mortgage lender to reconfigure your mortgage under a new payment plan. You may be able to achieve a temporary and more affordable payment schedule by doing so.

Finally, U.S. News suggests making real sacrifices. Cancel monthly subscriptions you do not need, eat in and do not shop unless absolutely necessary. In short, live within your means.

The information in this article is for informational purposes only. It is not meant to be construed as legal advice.