How Can you Avoid Bankruptcy? What are the Alternatives?

Debt can be overwhelming, especially when you are not in a position to settle it and filing for bankruptcy seems like a feasible option. Even then, declaration of bankruptcy can have a devastating effect on your credit score, and it’s advisable that you mull over your options before filing for Chapter 7 or 13 bankruptcy cases. It might take you longer or cost a little more to clear your debt, but you should seriously consider the following alternatives to save your credit.

Find a Way to Increase Your Income

Getting a part-time job as a way of increasing your income could help you settle your debt significantly. Of course, you will need to have a job card to head over to to view a variety of IDs and decide which one fits your organization’s style. Indeed your employer will have to pay for the badge – after all, you’re broke. Start an online business to make some extra cash on the side. Be sure to dedicate the new found income toward paying your debt and stick to your budget.

Offload Some of Your Assets

Offload whatever you can spare and use the money to pay off your debt. It could be anything including furniture, electronics or jewelry. While it may be inconveniencing living without some of your possessions, selling what you don’t necessarily need will help spare your credit. Furthermore, the inconvenience is only short-term.

Renegotiate Your Debt

If you are not able to service your debt, it is wise to renegotiate the terms of payment with your creditors. The creditors would opt to receive some money than no money at all. Renegotiate for lower monthly installments to what you can afford. Avoid using debt settlement companies and instead, use the money to offset what you owe.

Pay Off Your Debt

Perhaps the easiest way to avoid bankruptcy is to, well, pay off your debts. There is no point of letting your debt escalate while you are in a position to pay it off. Look at your budgetary allocation and see which areas you can cut on spending to have enough money to pay what you owe. You may consider unsubscribing from an expensive cable or satellite television package or shift to a cheaper cellular tariff.

Seek Funds from Alternative Sources

While it may not make sense to take debt to pay off another debt, sometimes it’s the most viable option you may have. However, in case you decide to borrow money to help ease your debt, ensure that the lending source understands your current financial woes and won’t ask for the money until you are out it. Calculate how much you need to get out debt and approach a friend or family member for a bailout.

The Bottom Line

It is not that hard to get out of bankruptcy. Still, you need to come to terms with the reality as soon as possible to enable you to strategize a comeback. Spend your money wisely and start to save to avoid going broke in the future.