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Monday, February 2, 2009

How To Deal With A Bankruptcy And Come Out On Top

By Chris Channing

Bankruptcy, the act in declaring that one is unable to pay their bills, is no light decision. It means that, on average, one won't be able to make use of their credit or sometimes even get a job or living arrangement without difficulty for a period of 10 years. Obviously, avoiding a bankruptcy should be a top priority.

The first step in avoiding a bankruptcy is avoiding spending money. Studies show that most of those who are in bankruptcy are young, have made poor buying decisions, and have more than one credit card. The logical thing to do is to either return or sell items bought on shopping sprees to help pay debts, and then learn better budgeting practices as time wears on. In some cases, counseling may be required as shopping can be additive.

Even when few options present themselves, there are ways to bypass a bankruptcy when all seems lost. Going to see a financial adviser is one method of getting an all-around solution to a very big problem. Budgeting solutions, debt consolidation, and refinancing can all be done through advisers who have the contacts needed to change the outlook of a consumer's debt.

Refinancing a debt is another opportunity for those in hopeless situations. If interest rates are the primary reason of one's inability to catch up with their finances, talk to lenders or credit companies to help bring the rates down through refinancing. It doesn't always save a substantial amount of money with smaller debts, but can help greatly with large debts.

Consolidating a debt is what happens when one takes debts from many companies or lenders and creates one single debt. This is usually the result of a lender offering a consolidation package, which allows for smaller individual payments but usually extends the life of a debt. It also gives the lender a cut in the form of more interest rates to pay, but debt consolidation still makes a debt more affordable when there isn't enough money to live on after paying bills.

Of course, spending money isn't always the problem in the equation. Making money, whether employed or not, is what should be targeted after expenses are lined out. obtaining a second job if employment is had is always a good idea. Otherwise, applying for government benefits of unemployment or disability can help alleviate the blow of debts that comes each month.

Final Thoughts

Bankruptcy may seem like an easy way out, and indeed it can be, it will have long-lasting effects that should be considered. Talk to a financial aid to find out more information on your options.

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