How Your Family Can Avoid Bankruptcy

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While filing for bankruptcy may seem like an easy way out of some of your biggest financial problems, it can also make it more difficult for you to achieve all of your goals both now and in the future. The good news is that there are steps that you can take now to help to avoid having to go down this road. Here are four of the best steps that your family can take to avoid having to declare bankruptcy.

Consolidate Your Debts

In most cases, declaring Chapter 7 bankruptcy means that your debts are wiped free. Although this may seem like a big burden lifted off your shoulders, it can also mean that you have to turn over your assets. A better idea is to talk with creditors about how you can set up a repayment plan. This means that you need to reach out to your creditors and come up with a debt settlement plan. Many times this will translate into the ability to waive payments in the short term in exchange for larger payments in the future. As long as you show that you are working in good faith to pay these off, many creditors will be able to work with you through this process. Consolidating all of your debts into one single payment may also prove beneficial. Another option is to use a mediator to negotiate for you. A consumer proposal Canada professional can help you to renegotiate what you owe on more favorable terms.

Sell Your Property and Assets

One of the easiest ways to avoid bankruptcy is to examine your property and assets to see what you may be able to sell. Keep in mind that you may lose some of these assets to a bankruptcy trustee anyway, making it a smart move to do it proactively. This is particularly true if you own property or a home. It is important to be realistic about what you can bear to part with, both practically and emotionally. For example, could you get by with just one vehicle in your household? Do you have any valuable collections that may be profitable if you list them on an auction site? There is a good chance that you are sitting on some extra cash if you are willing to make a few sacrifices. Even if you do not have enough assets to pay off the entire debt, knocking some of it down may make the financial burden more manageable for you.

Look Into Mortgage Options

If you are already a homeowner, you have even more options available to you as you look to avoid bankruptcy. Restructuring your home mortgage can be a good solution if you simply need to free up more cash. You can either look into refinancing or meet with a mortgage consultant to restructure your payment plan. Many housing lenders will be open to helping you to reconfigure your mortgage under different terms. This could translate into lower payments on a temporary basis. By refinancing, you also may be paid money upfront that you can use to pay off debt and avoid having to go through the bankruptcy process.

Ask Friends and Family for Help

It is never comfortable to have to ask friends and family for money. While this may be the last resort for some people, it is usually the fastest and easiest way to avert bankruptcy without a load of paperwork. Do not be ashamed of having to ask for help. There may be some people in your life who are more than happy to help you through this rough spot. Before approaching the discussion, it is a good idea to draw up a repayment plan. Having something in writing, even if unofficial, can be more convincing. They are going to need to be convinced that you are good for the money. The last thing that you want is for this to strain your relationship with others.

Conclusion

It is not easy to be staring at bankruptcy. However, following these four tips can help you to avoid having to go through this arduous and often devastating process. It is important to remember that you always have options.