Aside from other negative events that can happen in a person’s life, such as severe illness, disability or divorce, bankruptcy is considered one of those additional misfortunes that affect both the psyche and credit report of a person. Thus, it is better to seek other alternatives before filing for Chapter 7 or 13 bankruptcy. Alternatives to bankruptcy in Houston can save your credit even if it might cost more or longer to settle your debt.
Nobody wants to even let the thought of bankruptcy slip their mind. Businesses or individuals can file for bankruptcy due to various reasons, but going bankrupt forces one to declare complete insolvency. Going bankrupt isn’t always as a result of irresponsibility and the below preventive measures can be taken to reduce the risk of going bankrupt.
1. Settle your debts
Find out if you can pay off and settle all your debts over a stipulated period of time. You can also look at your budget and cut down any unnecessary expenses that you can live without, such as landline, cable or satellite television.
2. Sell your property
You can opt to sell some of your property before resorting to bankruptcy. Check and see what it is that you can sell such as antiques among other valuables. This is because, in a Chapter 7 case where there is total bankruptcy, your property is normally up for review by a trustee that makes the final choice on which of your properties to sell or liquidate so as to settle your claim.
Find out the value of your property before selling. Even if it won’t bring you much money, pay off a bit of any debt that you might have instead of surrendering your property forcefully.
3. Get Help From Family and Friends
Make an estimation of the total amount of money that you need to avoid bankruptcy and how much you can raise. Although it is not a solution sought for by many, you can approach your friends and family for help. Figure out how you will repay them before you approach them to avoid any misunderstandings that might arise later on.
While it might be a difficult choice to approach your relatives and family for help, choose those that you can trust and be sure to repay them.
4. Find alternative sources of income
You can further seek alternative ways to increase your income like getting a part-time job or working overtime. If you already own a business, think of extra services that you can offer your customers will grow your business and increase your earnings.
5. Monitor your credit score
Always check your credit score throughout the year for a follow-up and in case of any errors, you can dispute them and bring your scores up to date. A big drop in your credit score can result in your application being denied when you are applying for refinancing or additional credit to hold you over.
Declaring bankruptcy may not only damage your credit, but it could also affect future purchases and opportunities. Use the above tips to avoid any possibility of going bankrupt.