You probably know that there are numerous reasons for you to avoid bankruptcy. At first glance, bankruptcy might look like the simplest, most efficient option. After all, bankruptcy allows you to clear the slate and start fresh by eliminating the debts that you owe to creditors, the same debts that kept you up at night and had you sweating every time he phone rang. While bankruptcy certainly brings some advantages, it often turns out not to be the solution you originally believed. In the long term, a discharged bankruptcy can cause even greater nightmares that you can do nothing about. Whether being unable to obtain credit or a new job, you should do all that you can to avoid bankruptcy at all costs.
These are some of the things you can do to determine the likelihood of avoiding bankruptcy.
Prepare a full snapshot of your debt load.
Since debt is what led you to consider bankruptcy as your only option, start there. Evaluate your debt situation by weighing the true costs, both in terms of monthly carrying costs and total debt. Period. Start with the very same bills and credit card statements and weigh them against any potential assets (e.g. a mortgage will often have real estate as an offsetting asset). What other assets can be liquidated to clear debts?
Healthy Vs Unhealthy Debts
By listing all of your debt and aligning them with corresponding assets, you can also categorize these debts as "healthy or unhealthy." The purpose of this step is to see just how bad the situation is. If you have plenty of offsetting assets, then bankruptcy probably doesn't make much sense as you stand to lose these items in liquidation. While real estate will offset a mortgage, medical bills, most consolidation loans, and credit cards will not have an offsetting asset.
Sum Up All Your Income And Expenses
After analyzing what your net worth is, consider your solvency. This means taking your income and subtracting all monthly expenses from this amount.
Spend Less And Earn More
One of the most effective tips for getting out of debt involves combining a policy of spending less (thereby reducing your monthly expenses and improving cash-flow) with a policy of earning more income (thereby generating more cash to pay toward the debt). Saving a single dollar every day would result in monthly savings of $30, or $360 per year. When trying to avoid bankruptcy, such savings can be instrumental, particularly if you are able to increase income by the same amount; the end result is doubling available cash flow.
In instances where you are unable to find a way to make heads or tails out of your debt levels, consider seeking the advice and guidance of a state-qualified credit counselor. Such a professional can offer unbiased assistance. Alternately if you are unable or unwilling to speak with a professional, considering purchasing an e-book and computer programs that are devoted to improving your personal finances. Such a purchase should cost no more than $50 and can make a world of difference to overcoming your financial problems.
About the Author:
Chris Blanchet is the author of the Personal Finances e-book Help Fix My Finances, which also serves as the foundation of the Members Only website of the same name. You can visit his Debt-Free Blog at HowToRepayDebt.com.
Get all the information and photos:: http://coringa.info/finance/guide-to-avoiding-bankruptcy
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