No one considers filing for bankruptcy a great idea, and even top attorneys suggest you consider it a last resort. For most, the disgrace, guilt, and fear of bankruptcy are enough to find alternate solutions, and, to top that, it puts your credit score in tatters. Avoiding bankruptcy is the priority of many people, even if they have to take extreme measures.
It might be easier to overlook the repercussions of bankruptcy as a bystander; ask anyone who has faced this situation. Therefore, you should seek all possible solutions before taking such an extreme step.
However, coming up with alternatives may seem difficult or even impossible when you are to the point you are considering bankruptcy. To help you, here is a list of specific possible alternatives that you can explore before taking that route.
Avoiding Bankruptcy
Sell your Assets
Selling off assets is one of the most utilized options to save oneself from bankruptcy. You can try to pay your debt by selling whatever assets you can quickly dispose of, as debt payments must be made in time. If you take too long to make your payments, it might already be too late.
All of your assets, including land, furniture, jewelry, electronics, etc., could help you pay the debt. Some people are very attached to their things. However, they must realize that these things are temporary and, if you live to fight another day, they will eventually come back. Right now, the priority is avoiding bankruptcy at all costs because that may leave you with nowhere to go.
Settle your Debt
One way to avoid bankruptcy is settling your debt with an IRS payment plan. You may have to live hand to mouth for a certain period, cut out most of your extra expenses, and even some essential ones. You can live without a cell phone, satellite TV, and expensive meals for a while if it helps to avoid the ignominy of going bankrupt.
You will have to sit down with the IRS and devise a payment plan or hire an expert for the same purpose. You may have to endure the pain of working an extra job or two to make ends meet and pay your debt. However, this may be the only way forward for you.
Request your Creditors
It would help if you let your creditors know that you are in a distressful situation financially and hope that they are willing to help you in any way possible. You need to tell them about your plan for paying off the debt. If they are convinced, they might reduce your interest rate or monthly payments significantly.
You could be enrolled in a hardship program designed by banks and credit card companies to deal with similar situations. Before enrolling in a hardship program, ensure that the interest rates will go down, or you could end up with an even higher minimum payment.
Seek Professional Help and Consumer Credit Counseling
Some people are not so good at convincing others. Seeking professional help is the only way forward for some, as experts in the field can guide you in the right direction. Even the new bankruptcy laws require you to seek credit counseling before filing for bankruptcy.
The professional will meet with you and work on a possible payment plan within your budget. Avoiding bankruptcy means taking extreme measures as there are always holes in your budget that can be found and utilized.
As a last resort, you may turn to your family or friends to borrow money but be wary. Depending on the situation, you may choose this option, however, proceed with extreme caution.
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