How To Avoid Bankruptcy
Many people are searching
for tips to get out of debt and to avoid bankruptcy.
With the economy in the state that it is in I wanted to
provide some help to those that are trying to avoid
Tips to Avoid
Bankruptcy is a federal court process that helps
individuals and businesses repay their debts under the
protection of the bankruptcy court (Chapter 13
Bankruptcy) or wipe their debts out altogether (Chapter
7 Bankruptcy). When you file for bankruptcy, an
automatic stay goes into effect which prohibits your
creditors from taking action to collect the debt without
the approval of the court.
Facing the most difficult economic conditions in
decades, many Americans are sobering up to the fact that
they're deeply in debt.
For many American households, extraneous spending and
poor money management combined with an unforeseen event,
such as a job layoff, a health crisis, divorce or a
death in the family, has resulted in the perfect
cocktail for financial disaster. In fact, a recent
survey by FindLaw.com, the world’s leading online source
for free legal information, 10 percent of Americans have
considered filing for personal bankruptcy at some point
in their lives.
There are several danger signs that you’re headed for
financial trouble. One of the most worrisome is living
paycheck to paycheck. If you are, you’re not alone.
According to a 2008 survey by the American Payroll
Association, 71 percent of American workers are living
paycheck to paycheck. Other danger signs include:
* Making only minimum monthly payments on your credit
* Using a series of consolidation loans or home equity
loans to pay overdue bills
* Taking out cash advances to pay other bills
* Incurring a growing number of late fees due to late
To help you get out of debt and avoid bankruptcy, here
are eight tips from FindLaw.com:
Get Help Now. You'll need willpower and a lot of
support from those around you to get out of debt. For
many people, having someone who can hold you
accountable, as well as someone with whom you can
celebrate the little victories, is essential to reaching
your goal of becoming debt free. For expert help, seek
the assistance of a debt management or credit counselor,
which are available through many social service
agencies. Try visiting the United Way at
www.liveunited.org or call (888) 995-HOPE for a
toll-free foreclosure prevention hotline sponsored by
NeighborWorks America and the Homeownership Preservation
Foundation. If you’re facing foreclosure or are
wondering about declaring bankruptcy, immediately seek
the counsel of an attorney specializing in debt
management and bankruptcy.
Pick Up the Phone. Don’t wait for your
creditors to call you. Call them to negotiate a new
payment plan that you can realistically handle. Some
creditors might be willing to settle their claim with
you for a smaller cash payment, or they might be willing
to stretch out the term of the loan and reduce the size
of the payment.
Budget Time -- Back to Basics. Food,
clothing, shelter and transportation -- focus on these
basics when you start to determine which expenses are
essential and which are not. Start a monthly budget by
tracking your expenses against take-home pay (cash
flow). Cut the non-essentials and look at how you can
reduce the costs of your essential expenses. For
example, stop dining out and instead take your lunches
to work and make meals at home, or reduce your
transportation costs by taking public transportation
instead of driving to work. Likewise, start to look for
opportunities to increase your income, from taking on a
second job to selling household items on eBay or
Pay Essential Debts First. Paying all of
your debt down is important, but there are some bills
that are more important the others. Go back to the
basics -- mortgage, electricity, heat, water, etc. This
may sound obvious, but when pressured by bill
collectors, many people forget the obvious.
Don't Skip These Expenses. Depending upon
the laws in your state, there may be some expenses that
you must incur, such as auto and medical insurance,
student loan payments, child support payments, license
fees, and of course, paying local taxes as well as state
and federal income taxes. Skip any of these expenses and
you may wind up with a much bigger headache.
Go Automatic. Have your employer automatically
deposit your paycheck into your bank account. But don't
stop there. Arrange for the most essential bill payments
-- mortgage, electricity, heat and water -- to be
automatically withdrawn from your checking account. If
you have a mortgage, escrow property taxes to ensure
that they’re automatically paid.
Cut the Lattes and Lottery Tickets. Now is
the time to cut back on all of those little
non-essentials that eat up your budget -- the lattes at
your favorite coffee shop, buying lottery tickets or
purchasing that mid-afternoon candy bar or soda from the
company vending machine.
Beware of Credit Scams. Beware of ads and
phone calls from debt management companies that tend to
target consumers with poor credit histories, promising
(for a fee) to clean up your credit so you can get a car
loan, a home mortgage, insurance or even a job. The
telltale sign that it’s a scam is if the company demands
payment up front for their services.
For more information about getting out of debt and
avoiding bankruptcy, visit www.findlaw.com.
Courtesy of ARAcontent
Living Within Your Means - The Easy Way - Learn Realistic Ways To Find $100, $300, $500 or More a Month In Your Paycheck You Can Use To Pay Your Bills and Quickly Eliminate Your Debt Or For Any Purpose You Choose"
Budget Living - Discover How to Live on a Budget & Save
More Money Than You Ever Thought
Possible - Without Giving Up All
the Things That You Love!
Single Parents Cash And Sources Guide - Single Parents! Get the cash you need to relieve financial distress. 82 Page Directory of cash sources for single parents.
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