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California Bankruptcy Laws Article
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Planning to Avoid Bankruptcy
from:In many cases, it is possible to avoid bankruptcy with some major financial planning and whole new attitude towards your standard of living. In other words, you can avoid bankruptcy if you make plans to do so and then stick with those plans. There are plenty of reasons why you would want to take this approach if there is a way to avoid bankruptcy. Bankruptcy is life changing for many years and can make it more difficult to do certain things for up to 10 years including getting credit you need.
Avoiding bankruptcy is not something you can do in a haphazard manner. It requires a serious evaluation of your current financial status, a desire to reduce your debt and a determination to do whatever it takes. Your plans will require some sacrifices and belt tightening, but the rewards can far outweigh the effort required to avoid bankruptcy. Some people attempt to make these life changes on their own, but a bankruptcy attorney can assist you in many ways you may be unaware are possible.
The reason you are feeling as if you are near bankruptcy is because you have too much debt compared to your income. To reverse the process you will have to reduce your debt and maybe increase your income temporarily. Some people get a part-time job for a while in order to earn extra money to pay off debt. But there are many other steps you will need to take which either lower your debt or create revenue in order to pay off debt.
When you meet with a bankruptcy attorney, the first thing you do is complete a financial evaluation form. Sometimes, the attorney will see ways you can restructure your personal finances in order to avoid bankruptcy. For example, you can sell some assets that are not critical to your day-to-day life. These assets may be any of your personal property.
In some cases, you will be advised to sell your home in order to eliminate a large mortgage payment. You can then take the equity and purchase a smaller house or one with a lower payment. You can also use the equity to pay off debt even if it means renting for a while. Obviously, you need to reduce your spending however it is possible. If you have a lot of unsecured debt, it is often possible to negotiate with the credit card companies to get lower interest rates so you are able to actually make progress towards paying off the balances.
A bankruptcy attorney can assist you with negotiating with your creditors. For example, if you have loans it might be possible to restructure them in order to lower the payments. This is true for your car payment also. In other words, your attorney and you will go through each debt determine if there is a way to get your payments in line with your income.
One of the most important steps you will take though is to establish a budget and then develop the discipline to stick with the financial plan. It may hurt to sell some of your assets, but if you are able to avoid bankruptcy the rewards are immeasurable.
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