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6 Steps to Take before Bankruptcy |
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Written by Cornie Herring
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Tuesday, 12 December 2006 |
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Word Count: 628 If you currently have unbearable debts and thinking of wipe it off from your
statement by declaring bankruptcy; Just on-hold your decision for a while, there
may be other options available. Try to improve your situation before you
investigate the bankruptcy option. No matter which way you go, evaluate the 5
steps below to see if you could avoid taking that drastic step.
1. Detail out all your debts
First, look at all your secured debts such as mortgage and car loan. How much
are the repayment for each month? What are the interest rates?
Then, list down all the fixed expenses such as power, phone, insurance, food,
etc. What are the total costs for these expenses?
Follow by examining your credit card debts. Take out all your credit card
statement and write down the amount you owe for each card and their interest
rate.
Finally, write down all your other expandable; these are your optional expenses
such as entertainment, gym, membership, dinners at restaurant and other
impulsive purchase.
2. Eliminate the unnecessary expenses
Now you should have a better idea on where your money goes; Make a diet plan on
your cash; In your Cash Diet Plan, list down all the your savings from the
elimination of the optional expenses. You will be surprise that how much money
you can save by carefully control your expenses. The money you saved can be used
to pay down your debts.
3. Get your family involve and work as a team
Don't do it alone because under such as stress condition, you may out of control
and may not think and plan in clear mind; get your family together and let them
know your financial problem and have them to work together to control the
household spending and eliminate the unnecessary expenses.
4. Cash out with your assets
If you have equity, you are in a better situation because you could refinance or
get a secured loan for pay off your debts. If you are looking for bankruptcy as
your debt relief options, your may not have any equity in hand already. But
equity is not the only asset; many people tend to forget that things that have
cash value, but not sentimental value. Think antiques, old clothes or
collectibles.
List down all the assets you own which your can sell and cash out. Check the
closets, garage and storage locker, she says, "and find out what you can live
without". Then, cash them out through garage sales, eBay or consignment shops.
Use the money to pay down your debts as much as possible.
5. Go for consumer counseling service
Arrange an appointment with a credit counseling agency and let the counselor to
understand your finance situation and draft a budget for you. Review the debt
management plan proposed to you before your sign to enroll into the plan. You
may get a few plans from other credit counseling agencies for comparison. Choose
the one which best suit your current financial needs. Although a debt-management
plan can have a negative impact on your credit, it's better than bankruptcy.
6. Get A second or part time job
Utilize your out-of-work time on second or part time job. Although you may not
earn much in your part time job, a little money coming in can keep a bad
financial situation from getting worse.
Summary
Bankruptcy may be your easy way out from debts but the consequences may follow
you for 7 to 10 years. Always look for other alternative before choose for this
dramatic options.
Cornie Herring is the Author from "StudyKiosk-Credit Basics"-
http://www.studykiosk.com/creditbasics . "StudyKiosk-Credit Basics" is an
informational website on credit basics, debt consolidation and bankruptcy.
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