There are several options to avoid bankruptcy. A bankruptcy will affect your credit for up to ten years and it will be a public record document for others to see. There are ways to avoid filing for bankruptcy and since it is severely limiting to your credit, take note of every way before you file.
Selling assets can create enough money to pay down debts and avoid bankruptcy. Selling personal items has become simple with internet forums. Also, having a yard sale can bring in quick cash. Another option can be to sell you car, if you have two. If you only have one vehicle, sell it and take the cash to buy a less expensive car and pay debts with the excess. Lastly, all items can be sold. For example, furniture, jewelry, clothing and electronics can all be sold to help pay down your personal debt.
Credit counseling services will negotiate with lenders to reduce interest rates or loan amounts. This can create a large monthly savings and allow you to pay off the debts without bankruptcy. Most bankruptcy attorneys will require credit counseling first, so that you can try it before you decide to file for bankruptcy.
You can skip the credit counseling services and try to negotiate with your creditors yourself. If you are persistent, the banks will likely work with you. They can reduce your interest rate temporarily, or even reduce your balance. This will allow you to pay them back, which is what they want. They may report to the credit bureaus as settled, which is not the same as paying the debt off. It means they took less than what they were owed and this is a negative on your report. However, this type of reporting is still much better than a bankruptcy.
A payment plan can reduce your overall debt significantly. You and the creditor can come up with a plan that is affordable for you to repay, and the creditor will be repaid in full. There are many ways to pay your way out of debt. You can increase your income by taking on part-time work. It is only temporary, so whatever you can find that will help with your repayment will work. Contribute everything you make with the part-time job to your debt repayment.
You can also cut expenses to find more money. Most families could easily find a few hundred extra dollars in their monthly budget by cutting expenses. Some of the most common cost cutting plans are to stop eating out and clipping coupons. And if all else fails, you may be able to borrow from family, however, be sure you can repay after the debt is paid off, to avoid any family conflicts.