Avoid Bankruptcy With These Debt Elimination Strategies
Individual who want to avoid bankruptcy should spend time conducting research on debt elimination strategies. The Internet is one of the best sources for locating money management information. However, it is important to be cautious when buying products or services that claim to eliminate debts.
One of the easiest ways to avoid bankruptcy is by paying attention to spending habits and establishing a household budget. Many people are unaware of the amount of money they waste on items they really don’t need. Irresponsible spending can quickly deplete bank accounts and leave individuals unable to pay their bills.
When consumers are faced with the decision to file personal bankruptcy, they should obtain counsel from a bankruptcy attorney. In 2005, new bankruptcy laws were enacted through the Bankruptcy Abuse Prevention and Consumer Protection Act. BAPCPA requires bankruptcy petitioners to obtain credit counseling through an agency approved by the U. S. Trustee.
Credit counseling services can sometimes help people prevent bankruptcy. Credit counselors can enter into negotiations with creditors to eliminate late fees and penalties, reduce outstanding balances, or lower interest rates.
Individuals who choose to obtain credit counseling should work with one of the agencies approved by the U. S. Trustee. If they are unable to avoid bankruptcy, they will have met credit counseling requirements of BAPCPA.
Debt consolidation is often a good choice for homeowners who possess home equity. Debt consolidation requires homeowners to obtain a second mortgage using their property as collateral.
Using funds obtained from the home equity loan, borrowers pay off their outstanding debts and have one loan payment instead of several. Home equity loan interest rates are substantially less than rates charged by credit card companies and can greatly reduce monthly payments.
Many people use credit cards for daily living expenses. These small amounts can quickly add up to several hundred dollars in interest; creating additional debt. When consumers are unable to pay credit card payments in full and make only minimum payments, they are cheating themselves out of their own money.
Consumers can sometimes avoid bankruptcy simply by taking time to review where they are spending their money. One simple way to track expenses is to record each expense in a notebook. Most people are surprised to discover how much money they are wasting on items they don’t really need.
As the cost of living continues to escalate, consumers must become proactive and pay attention to spending habits. Many options exist for reducing expenses. These can include enrolling in budget plans offered by utility companies; bundling services such as phone, internet and cable; utilizing basic cell phone packages instead of paying for unlimited talk and messaging plans; and comparison shopping and couponing.
If filing for bankruptcy is the only option, consult with a minimum of three bankruptcy attorneys. Most law firms offer complimentary consultations to discuss options. Most people are required to file for Chapter 13 bankruptcy and establish a repayment plan.
Realize bankruptcy remains on credit reports for ten years and can prevent you from obtaining any type of credit for years to come. Whenever possible, take measures to avoid bankruptcy and prevent the financial fallout that follows.
Simon Volkov is an established business owner and real estate investor who specializes in helping individuals understand and locate resources to avoid bankruptcy. Simon offers an extensive personal money management article library, along with bankruptcy resources via his website at www. SimonVolkov. com.
