It goes without saying that nobody actually wants to file for bankruptcy. It is a reality of life though, and a last resort measure that some people will have to take. While at Tom Bible Law, we can help those who are going through the bankruptcy process, we would always advise prevention when possible.
Each individual situation is unique and requires a different approach. In this blog post,
we will share several efforts that can be made to avoid having to file for bankruptcy.
1. Settle or negotiate your debts. Commonly, Chapter 7 bankruptcy is a liquidation, meaning it wipes clean or erases your debt. To do that though, it can mean relinquishing your assets or property, which most people want to avoid at all costs. If you’re on the brink of filing for Chapter 7, it may be possible to hold onto your assets and property and still pay back your creditors by settling your debts through debt consolidation. This is an arrangement with lenders to repay your debts without losing any of your assets. In this case, the person who is close to bankruptcy consolidates their debts into a single loan with one monthly payment and at a lower interest rate. Some lenders will also work with you to come up with a reduced payment plan schedule.
2. Sell your property. If you’re in debt and know bankruptcy may be in your future, think about what you can afford to part with – maybe a second car, collection of antiques, recreation vehicle, or other valuables? Even if this approach only raises a minimal amount of cash needed to pay off debt, every little bit can help.
3. Borrow money from family or friends. This is hard for many people, as it requires swallowing your pride. However, confiding in a parent, sibling, or trusted friend and asking for help can be a good option. Make a budget and see how much money you must have to avoid bankruptcy, and only ask for what you really need. It’s also a good idea to come up with a plan to pay your lender back.
4. Restructure your mortgage. If monthly mortgage payments are a big burden, another option might be to restructure or refinance your mortgage. By arranging a new mortgage payment plan, you may be able to save some money to put toward paying down your debt immediately.
5. Make real, hard sacrifices. Sometimes the best way to save money is just to cut back. Make sure the necessities are taken care of: food, shelter, utilities, transportation, clothes to wear. Eating out, fancy coffee, satellite or cable TV, a gym membership, vacations, or entertainment may be things you can let go of, at least in the immediate future to avoid bankruptcy. This can free up a lot of money to help get you out of debt.
6. Get a second job. Having an additional source of income can help you avoid bankruptcy if you immediately put the extra income toward paying off your debts. It will be hard, and you will be tired, but remember that it will only be temporary. The payoff down the road will be worth it for you and your family when you avoid filing for bankruptcy.
It may be that just one of these options is what you need. Or, you may need to try a combination. Again, none of these options will be easy, but believe us when we say that bankruptcy will very likely be harder. For those who give it their best effort and still find themselves facing bankruptcy, we will be here to help you through the process.
If you are struggling with excessive debt and looking for a sound solution, the attorneys at Tom Bible Law, can help you explore your legal options. We have helped numerous clients from Chattanooga and throughout Tennessee and North Georgia achieve their debt relief goals by guiding them through the bankruptcy process. We work with every client personally, giving each and every bankruptcy case the time and attention it needs. We understand the financial pressures our clients are facing and work to resolve their debt problems in a favorable, cost-effective manner. Our bankruptcy lawyers have more than 80 years combined experience and are here to help. Call us today at 423.424.3116 or drop us a note here.