A few ways to prevent bankruptcy in the first place

On behalf of Enterprise Law Firm posted in Chapter 7  on Tuesday, February 26, 2013.

Is filing a Chapter 7 or Chapter 13 filing ideal? Of course not. It has its consequences, and the filer will have to deal with them for many years to come. For example, since a bankruptcy filing will immediately impact your credit score, it can be difficult to secure a loan in the aftermath of bankruptcy.

However, the alternative is even worse. An individual could fall so deep into debt that they face criminal charges for, say, evasion. Or the debt can become so overwhelming that an individual is basically forced to file for bankruptcy — and at that point, it can be “too late,” so to speak. What we mean by that is, you may lose more if you file a “late” bankruptcy filing as opposed to being proactive, accepting the negative side-effects of a bankruptcy and just going through with the filing at an early stage to get your financial situation under control.

Given this information, here are a few ways to avoid ever getting to the point of bankruptcy — knowing that, if you needed to file, a Chapter 7 or Chapter 13 filing is not the worst outcome in the world:

  • Discuss things with your creditors. You can attempt to restructure your situation with them. If that doesn’t work, a Chapter 13 filing achieves a similar goal.
  • Reevaluate your assets and bills. For example, if you don’t watch a lot of TV, ditch cable. If your cell phone bill is too high, maybe it is time to get rid of the unlimited plan. In addition, you could sell off items in your house that are valuable, but may not be too important to you anymore.
  • Be proactive. Just like we mentioned above in regards to filing for bankruptcy early; if you are experiencing financial problems, reach out to a professional to try and get your financial house in order.

Source: Fox Business, “Three Tips to Preventing Personal Bankruptcy,” Donna Fuscaldo, Feb. 21, 2013

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