Bankruptcy can provide a fresh start, but it isn’t right for everyone. Before filing, you should consider the extent of your debts and your long-term financial goals. Alternative solutions often yield better results and can help keep your credit intact.
Reducing expenses and negotiating with creditors is a good way to avoid bankruptcy. This strategy is best carried out prior to filing and requires careful planning and budgeting. If you can cut your costs or negotiate lower interest rates, the savings could be used to pay down your debt.
You can reduce your debt by selling assets. This can help you pay off your debts, and could help you avoid having to apply for Chapter 7 bankruptcy. The best way to prepare before selling your assets is to consult with a bankruptcy lawyer and make sure you’re eligible to receive this relief.
In bankruptcy the court will erase or “discharge” the majority of unsecured debt including credit card debts and medical bills, late utility bills and personal loans. Certain debts can be protected by bankruptcy, including student loans, recent taxes such as alimony, child support and alimony. Before declaring bankruptcy, it is recommended to eliminate non-priority debts and then use any savings you can make on more expensive debts that can’t be eliminated through bankruptcy.
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