Are you struggling to pay your bills? If you are having money problems then you might want to read these 5 simple ways to avoid bankruptcy.
In a world characterized by indebtedness, inflation and so many money related troubles, it is so common to find individuals drowning in debt for one reason or another. Though filing for bankruptcy may seem like the easiest way out for most people with financial troubles, very often they opt for it too soon without exploring other viable and equally effective simple ways to avoid bankruptcy.
As of September 2019, the average U.S. household with revolving credit card debt has an estimated balance of $6,849, costing an average of $1,162 in annual interest according to NerdWallet. Debt carried over from one month to the next is resolving debt and usually incurs interest charges.
The average U.S household is estimated to owe $137, 879, totaling to $14.15 trillion. This debt can include mortgages, home equity lines of credit, auto loans, credit cards, student loans and other household debt, according to the Federal Reserve Bank of New York.
This has not been made any easier with the on going global threat of COVID-19, with cutbacks equivalent to nearly 200 million full-time workers expected in the next three months alone according to the United Nations.
With an ever-increasing level of personal debt being reported, along with record numbers of bankruptcies and insolvencies, it’s no surprise to anyone that money is becoming a big problem for thousands if not millions of people around the world.
In this article, we explore 5 simple tips to avoid bankruptcy during this COVID-19 pandemic which has ravaged economies around the world and left many jobless.
Reduce Your Spending.
This is one of the 5 simple ways to avoid bankruptcy. We spend so much money on non-essential and luxuries items that we often don’t need. It is important to differentiate between your necessities and wants. Slash spending on things like movies, dinners out, buying unnecessary clothing and gadgets and expensive haircuts. It is critical that you priotize and trim your budget to spend only on things you need.
“Your primary goal is to dedicate as much money as you can each month to paying down your debt,” says Elizabeth Bauer – Simmons, a credit counsellor for a non – profit organization in Atlanta.
Pay Your Bills On Time Each Month.
One common mistake we make is to postpone debts and this can result in increased payments in the form of late fees for every payment you miss.If you miss two payments in a row then your interest rate and finance charges will increase.
For efficiency in paying your debts in time, you can consider using a monthly bill payment calendar. Use a bill payment calendar to help you figure out which bills to pay with which paycheck. You can easily use this calendaring system on your computer or smartphone by entering your payments there and set an alert to remind you several days before your payments are due.
Ask For Help From Family And Friends.
Normally, borrowing money from friends and family is a bad idea but it might be the only thing standing between you and filling for bankruptcy.
Money has been known to be one of the major factors that creates hardships in relationships to the point of ending them. We have seen marriages but were destroyed as a result of finances so you want to be very careful and trod with caution when considering this option.
Take time to calculate how much money you need to avoid bankruptcy, carefully consider how much you are able to contribute to your debt and then ask friends and family to help you make up the difference.
Also make sure you develop a plan for how you will repay them once your financial situation has turned around before you approach them.
Sell Off Some Of Your Assets To Avoid Bankruptcy.
Painful as it may sound to rid yourself of some of your most valuable assets, it’s worth it to strongly consider it as a bankruptcy alternative.
Sell off whatever you can spare and use the money to pay off some of the debts. You can sell your furniture, that shoe or cloth you no longer use, jewelry and electronics on various online platforms such as eBay or Craiglist.This will go a long way in helping you salvage your financial situation. Remember, you can always make more money and repossess these valuable items of yours.
Seek Consumer Credit Counselling.
This is one of the least considered options as an alternative to filing for bankruptcy. Should you fail to make head way progress working with your creditors then you may consider enlisting the help of a professional. Find a consumer credit counsellor with experience working with creditors to get your payment and interest rate reduced. This goes without saying that your creditors are also human and may have been faced with a similar financial difficulty in the past. A good consumer credit counsellor should be in position to persuade your creditors to reduce your payment and interest rate.
It is important to note that the new bankruptcy law requires credit counselling prior to bankruptcy filings anyway so it’s worth trying after all.
Are you facing financial difficulty or do you know anyone contemplating filing for bankruptcy?
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