The first and most important fact about bankruptcy is that it should constitute the ultimate solution whenever you are in financial difficulties. When you are struggling with huge debts, even if you think it is impossible to get out of them, you must try several solutions before opting for the final decision of bankruptcy. If you feel yourself constrained, that debts are all around you, don't postpone. The more you postpone the payments, and wait for something to happen, the worse it will get. You need to take action immediately, and start by being your own financial manager. Here are some steps you must take when you feel that you are heading slowly but surely towards bankruptcy:
- Take pen and paper, note down all of your outstanding debts (with interest rates)
- Sort things out. See whether you can afford at least to pay back those loans which have very high interest rates. The sooner you get rid of these, the better.
- You might have money stuck elsewhere, which you can use for paying off debts(stocks, jewelry music boxes, expensive equipments, even your vehicle transport). Try to pay off from your debts as much as you can through own powers, and not by taking on another loan.
After these steps, and if you have found a way of paying off at least a small part of your debts, you can move on to the next solution. For example, say that you have an overall debt of $15,000. Now, by trying to cover even 10% of that debt by selling personal items is one step forward on your way of getting out of debt. If you manage to do so, that means you have by now a debt of only $13,500, which means that if you take on a loan for paying your debts off, you won't be at least paying for the interests accruing on the sum of $1,500. Even if you sold personal items in order to make repayments, at least you didn't have to make another loan in order to make payments. You managed to get rid of a small part of your debts, but you still have a great part left over which must be taken care of. To avoid bankruptcy a person has to use in a way or other a bankruptcy trustee. The following are some of tips you could implement in order to avoid filing for bankruptcy:
- Debt consolidation loans. Take out such a loan in order to pay off the remainder of your debts. This is a secured loan (collateralized), so it will definitely come under good terms: lower interest rates than an unsecured loan, higher loan to value, and sometimes there will be no late payment fees.
- Debt settlement. You could contact all of your lenders in order to settle your debt with them. This can happen over the phone, or by writing debt settlement letters, where you carefully will expose the reasons why you cannot continue the repayments (your financial status changed because you lost or changed your job for example). Lenders are generally flexible to work with in these matters, because they want to recuperate their loss even if at a smaller percentage. So, you might easily get your lender lower your interest payments or extending the term of you loan so that you will pay less on a monthly basis.
- HELOC – or home equity line of credit, is a secured type of loan and differs from a home equity loan which you receive as a lump sum, in that a HELOC works like credit card loan (only secured), so on much better terms. You will have access to a certain amount (settled by the lender, depending on the equity left in your home), where you can withdraw money from any time you need and as often as needed.
So, it is very important that you take the ruling into your hands and commit everything possible to get rid of that debt as soon as possible. There are a variety of reasons people may find themselves paying off debts. Making payments for your Michigan DUI Lawyer, car payments, credit card debts and other similar obligations are only a few examples. It will take you some years until you can see that record clean, but with every repayment towards that debt you will feel more and more enlightened. If you consider that you need counseling because you cannot manage everything by yourself you can turn to a debt counseling agency in order to get the proper advice.
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