The purpose of bankruptcy is to give you a fresh start after finding yourself in a bad financial position. However, no one wants to file bankruptcy. Even as a Troy, Ohio Bankruptcy attorney, each case is initially approached asking the question, “Is bankruptcy really the best option for this client?” The ability to erase debt is not a quick fix and does have consequences. Nonetheless, there are many situations when it is the best solution.
Therefore, if you have found yourself with a reduced income, unemployed, or filing for divorce, you may have good cause to file. But, it is always better to avoid bankruptcy, if it is possible. Regardless, a good Troy, Ohio Bankruptcy attorney will walk you through other options, if those options exist. While the ultimate decision is yours, it is an attorney’s fiduciary responsibility to work in the best interest of a client, and provide the best advice for each person’s individual conditions and circumstances. With this in mind, today’s blog entry shares methods and strategies to avoid filing for bankruptcy.
Tips to Avoid Filing for Bankruptcy
- Seek Debt Consolidation – A debt consolidation loan is one way to avoid bankruptcy. In many cases, this needs to happen before your financial problems start damaging your credit. Nonetheless, this is particularly attractive for those who own a home and can take cash out of a mortgage refinance. Not only will it lower your monthly payments, but, in many cases, you can deduct the interest from your taxes.
- Negotiate with Your Creditors – Many creditors will allow you to negotiate, especially if you are providing reasonable terms. The key to this technique is complete honesty. If you have been forced to take a lower-paying job, became unemployed, or are going through a divorce, be ready to provide documentation. When you are trying to avoid bankruptcy, it makes sense that a creditor will settle for something rather than nothing, especially if the debt is already charged off.
- Sell Your Property – In Chapter 7, the court will look at your property to discover if there is any non-exempt property of value to sell. There is no reason you can’t do this before filing. If you have items of value, why not sell them to pay your debts? However, the one mistake to avoid is liquidating 401(k) or IRA accounts, which are exempt in a bankruptcy.
- Reorganize Your Life – One great fear about bankruptcy is the possible change in lifestyle. Yet, if you are drowning in debt, you may have no choice. Consider downsizing your home, buying a less expensive automobile, and changing your spending habits. Limit the number of times you eat out, restrict your clothing spending, and cancel that gym membership. You can save yourself hundreds (or even thousands) every month with lifestyle changes.
What haven’t we covered yet that is important to you? If you would like to talk about methods and strategies to avoid filing for bankruptcy, or need more information, please contact us.