BankruptcyFiling Bankruptcy?

Bankruptcy – Most adults have debts that they need to pay each month, some of the most common types of debt are credit card and payday loans. At times people take on a lot of debt which leads to financial difficulties, when someone is undergoing difficulties with their finances, they may consider bankruptcy in order to eliminate the heavy burden called debt.

What Is Bankruptcy?

Those who ask the question what is bankruptcy will need to know some important facts so that they can make decisions that benefit their financial situation in the future. Bankruptcy is the process in which a person, or a business, legally declares insolvency. In other words, a person filing bankruptcy claims that they are not able to pay their debts. In results of eliminating all debt while not being able to apply for any type of credit or loan.

Why File Bankruptcy

People usually file bankruptcy as a last resort when they have tried everything to eliminate their compound debt. Bankruptcy is available in two forms for individuals, such as chapter 7 and Chapter 13. These two chapters have different properties and should be filed depending on the debt of the individual or Business. Here is a brief summary of both chapters:

  • Bankruptcy: Chapter 7

With Chapter 7, a person gets a full liquidation and discharge of all unsecured debts like credit cards, personal loans & medical bills.
But it does not remove any court judgements, child support, alimony, student loans or back taxes. Also It will leave a mark on your credit report for 10 years.
  • Bankruptcy: Chapter 13

A Chapter 13 allows a person to make a payment plan for 3- 5 years to manage their debts.
Anyone looking to file bankruptcy will need to go through a legal process where a trustee is appointed for them to evaluate their assets and liabilities.

Consider The Following

While bankruptcy can help a person get out of debt or make it much more manageable, it can have long term consequences. Anyone who files bankruptcy will significantly lower their credit score and have difficulty in getting auto loans and a mortgage.
A bankruptcy will also be on someone’s credit report for ten years as well. As a result, of these consequences, it is important for a person to consider alternatives to bankruptcy. Fortunately for consumers, there are plenty of ways to avoid bankruptcy and get out of debt at the same time.

Avoiding Bankruptcy

Whenever a person is looking for ways on how to avoid bankruptcy, they can consider a variety of options. Some of the solutions that they can look into when looking for ways on how to avoid bankruptcy is to lower their expenses and negotiate with the creditors. Consumers can also avoid bankruptcy by prioritizing their debts and looking into debt management services like credit card relief programs or payday loan relief programs.

Cut Your Expenses

For those who are avoiding bankruptcy, one of the best things that you can do is cut expenses. There are some things that people pay for each month that they may not need as much as they do. For example you can:
  • Cut your satellite television bill by eliminating some programs.
  • Change phone lines to a cheaper company
  • Lower home internet speed
  • Lease your next vehicle for lower payments
  • Avoid eating outside, cook at home
  • move in to a cheaper apartment / home
  • Preserve clothing, don’t go shopping
  • You don’t need the new iPhone, yours works just fine
This can give you some extra money to pay off your debts by cutting expenses. Individuals will see a surplus of cash available to make progress towards paying their debts to avoid bankruptcy.

Negotiate With Your Creditors

Another way in which a person can avoid bankruptcy is by negotiating with their creditors. In this situation, a person will discuss their debt burden with the creditor and request for a lower interest rate or an extension of the due date. They can also request a lower monthly payment in order to decrease their monthly debt burden as well as paying the debts in a timely manner.
Negotiating with creditors is one of the first things that someone should do when they are having difficulty paying their debts. With successful negotiation, a person can make their debt more manageable. If you’re not good at negotiating or don’t know how, I’d consider utilizing the debt management services below.

Prioritize Your Debt

Whenever a person is in debt and is looking for ways to avoid bankruptcy, they will also benefit by prioritizing their debts. While a person may have several debts, there are some that are more important than others. One of the best ways to prioritize debts is to find the ones that have the highest interest rates.
  • High Interest First

    It is a good idea to pay off the high interest rate debts so that you can save money in the long run. Individuals will want to find the debts that have the highest balance as well.

    Paying off debts with the highest balances can help you eliminate most of your debt burden and make it more manageable.
  • Small Debts Second

    Lastly, paying off the smaller debts first can eliminate some of the burden and enable you to focus more on paying off the high interest debt balances.

    Using this approach will enable you to make progress towards paying debt and avoid filing bankruptcy.

Utilize Debt Management Services

While many consumers can look into paying off debts and not filing bankruptcy themselves, there are very helpful services that you can use to find the trust & relief you want.
These services are called debt management. With debt management a person can work with a legal team of professional that will evaluate your situation while counseling you with financial advice on how to best manage your money. The good about these services is that using their legal team of attorneys, they will negotiate all your debt into one, flexible payment and try to remove any late fees.
They may also arrange to help you lower your monthly payments, working with a debt management company will allow you to find the best way to manage & pay your debts without having to consider bankruptcy in the long run.

Consolidate Credit Card Debt

Most people have conventional debts such as credit cards; Credit card debt can really impact your financial life, as well as your credit score, so it’s very important to pay those as quick as possible to avoid piling interest & late fees. One way to pay your credit cards is by utilizing the credit card relief programs that CCCR provides. Consumer Credit Card Relief is a national full service debt relief company that helps consumers struggling with credit card debt by providing debt relief programs such as :

Consolidate Payday Loan Debt

However, there are some people who get payday loans in order to pay for their basic expenses. At times, the payday loan debts get unmanageable and a person then is in need of assistance.
As a result, they look into options such as payday loan relief programs. With these payday loan relief programs, individuals can work with companies that will help them make progress towards eliminating this type of debt.

Payday Loan Debt Consolidation

One of the options that you can look into when seeking relief from payday loans is to consolidate payday loan debt. This is a type of service in which you can combine all of your payday loans into one loan. A lender will pay off the entire balance and then allow you to make payments on one flexible loan.
In most cases payday loan debt consolidation will enable you to pay this debt at a much lower interest rate, remove any fees & lower monthly payments. As a result, consolidation is a very effective way to get out of payday loan debt.

National PayDay Relief

National PayDay Relief has emerged as one of the most effective ways for people to manage payday loans. With National PayDay Relief, consumers can get the help they need by providing them with the best solution to get rid of payday loans. NPDR will go over things such as your income, your expenses, other debts & your assets to understand your situation and then negotiate with their attorneys to settle your payday loans once and for all.
Once they go over these things, NPDR will help you find a way to negotiate better terms with all of your payday lenders. By working towards eliminating payday loan debt, a person will be in better position to make progress towards getting rid of all of their other debts.

Get Relief, Not Bankruptcy

Getting out of debt can be a challenge for those who are experiencing financial hardship. While bankruptcy is an option, it should only be done as a last resort. Instead of filing for bankruptcy, a person will want to look into other options that can lower their debt burden, make it easier to handle and eventually eliminate within a matter of months.
Options such as debt management services, payday loan debt relief services and doing things such as cutting expenses and negotiating with creditors will help you better handle your debt.