Know how to avoid bankruptcy
Sometimes people become so much burdened with debt that they find it unbearable and toy with the idea of filing for bankruptcy. In their desperation, they simply forget the myriad of problems they will have to face as a consequence of their decision. Once someone files for bankruptcy, it adversely affects his/her credit rating on a long-term basis; obtaining home finance becomes a lot more difficult and put briefly, hosts of other financial problems crop up. So a person should consider bankruptcy only as the last resort, when other all other available options have been tried but none has yielded the expected results. If you ever be in a similar situation, you may follow some simple guidelines that may help you to avoid this dreaded option.
Things to know and do
Start negotiation with your creditors to explain your current situation. Tell them why you have defaulted on payments, and explain all other problems that are making repayment difficult for you. They are likely to understand your problems and reorganize the payment plan in a way that will suit you. You may also consult a credit counselor who can help you to improve your money management options and plan a new repayment strategy. They may sometimes also help you to negotiate better repayment terms with your creditors.Debt consolidation
Debt consolidation is another effective way for avoiding bankruptcy. You can consolidate your various debts through a debt consolidation loan that has a high interest rate, but it packages all your debts into one lump sum. Such a debt consolidation will make repayment much easier for you. As the increase in real estate prices push the equity upwards in most homes, a home equity loan may be ideal under such circumstances. You can also consolidate your multiple credit cards onto a single card at the lowest rate. In this way, you will be able to discard the higher interest cards and bring all your credit card debt under one card that will bring down your payments.Selling your home is yet another alternative. It needs no saying that this is not a very popular option among most people and used only when someone does not have sufficient equity for a home equity loan. However, this might be the only reasonable choice if foreclosure emerges as the only other option. So let bankruptcy be only your last resort. But try to avoid it as much as you can.