Bankruptcy is a legal situation where an entity or organisation cannot pay the debt they owe creditors. Bankruptcy is a state declared on a person by the court and it can be voluntary or involuntary. Voluntary bankruptcy is a situation where the individual or organisation willingly lodges a petition of bankruptcy while if the court has to investigate an individual or organization and declares them bankrupt it is involuntary bankruptcy. Bankruptcy frees a person from their debts but affects the financial accounts of people and companies. It will have devastating effect on your credit score. So, you might want to rethink before filing bankruptcy. There are some things that you can do to salvage the situation rather than giving up too soon. A few things to consider for avoiding bankruptcy include.
Sell some of your assets
Do not wait to be behind payment before doing what you have to do to pay all your debts. Sell some of your assets if you have to just to avoid bankruptcy and save your credit. Declaring bankruptcy should not be the first option during times of financial challenges. These could be jewellery, landed properties, household appliances or furniture.
Find a way to pay your debt
You can try paying your way out of the debt. Find out what you owe and do your best to pay off the debt. You can draw up a payment plan that will show the way you can go about the payments. Throwing in the towel is not the best idea at this point. You may have to cut down on your spending and source for avenues to get generate funds to pay off the debt.
Inform your creditors of the situation
Reach out to your creditors and make them understand what you are going through. If you have created and maintained a cordial relationship with them in time past and you have not given them any reason to doubt your integrity then they will listen to you and help you avoid bankruptcy.
Get help from other sources
Get help from consumer credit councillor. You can get their professional help to work with your creditors to help you reduce your payment and interest rates. You can also get help from trusted family members. This is not always advisable but if the situation demands it then your family can be of immense help to you financially, morally and emotionally.