Bankruptcy options
Avoiding Bankruptcy

Avoiding bankruptcy

Bankruptcy, whether business or personal, is always best avoided. There are many ways to resolve financial problems without resorting to bankruptcy. If you suspect you're headed for trouble, it's important to act now to resolve it.

When you file bankruptcy, you can lose your home, car and other assets. You may face embarrassing borrowing or international travel restrictions. Your bankruptcy will be listed in the National Personal Insolvency Index, which can limit your career options. Contributions to a bankruptcy trustee from your income may be required. A creditor can even make you bankrupt.

Be aware of danger signs so you can stop problems before they start. Do you know how much you owe and does that amount exceed your assets? Is debt increasing while you pay only minimum balances? Do you take cash advances to pay bills? Have you spent your savings, or are you drawing from your retirement account to pay bills? Are you applying for new credit because your current cards are at limits? Do you avoid paying bills or pay late? Are creditors contacting you?

If you or your business are experiencing any of these symptoms, seek help now and learn what your options are. The sooner you face and deal with issues, the easier it will be to get back on track. There are numerous alternatives to bankruptcy.

Many creditors will work with you, especially when there are circumstances beyond your control. A temporary stay of repayment can be arranged, or terms of a debt can be renegotiated. Mortgage refinancing may provide money to clear or reduce obligations.

Formal arrangements can be made with creditors. Debt agreements can freeze your accounts and make it possible for you to repay money at a rate you can afford, and during which time you are not charged interest. Debtors may settle for less than you owe. You can even get help with budgeting, reduce spending, and free money to pay bills.

Debt consolidation loans are another alternative, and they can be unsecured so no collateral is necessary. You can sometimes reduce your payments by as much as 50% and repay the loan over a period of 1 to 7 years. There are no ongoing or early repayment penalties, although you may be charged an establishment fee. Debt consolidation loans allow you to repay multiple loans and debts with one personal loan on which you make only one monthly repayment.

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This information is general and not a substitute for legal advice.
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