Some Important Tips to Avoid Bankruptcy

In today's world of credit cards, mortgages and easy loans often marketed by various banks, many

people have more debts than they can afford to pay back on time. For many people, filing for

bankruptcy seems like the best option to take as they have creditors calling them all the time- adding to

their financial pressures and other pressing problems a person may have when they have so much debt

to repay.

Filing for bankruptcy is usually the last resort that people make but bankruptcy is irreversible and you

will be tainted with that word for many years. You will not be allowed to get any credit above five

hundred pounds without disclosing your bankruptcy and will not be allowed to hold certain important

jobs or run a business.

But no matter how dire your financial situation maybe, there are always other options you can take other than filing for bankruptcy; it is always best to avoid filing for bankruptcy as much as you can. Through bankruptcy, you may be able to get rid of your pressing financial pressures, but it isn't necessarily the end of your problems.

In fact, you will have to face many problems later on. Your whole financial records will be open for investigation by court appointed bankruptcy officials. They will poke their nose into all matters of your life and you will be legally bound to provide all your financial data, including bank accounts, savings, investments and assets. Anything that can be converted into liquidities or transformed in to money- which could include your family house and any valuable contents- will be taken and if you are employed, you will still have part of your salary deducted to pay off some of your debts.

I am sure you do not want to go through this bleak scenario so I will give you some important information about various kinds of alternatives you can look in to, so that you can avoid filing for bankruptcy. You should investigate all kinds of bankruptcy alternatives and avail credit counseling so that you can make the best informed decisions which are suitable for your unique requirements. Some of the tips to avoid bankruptcy are given below.

First of all, you should get into negotiations with the people you owe money. When you realize that you are going to have major problems in repaying your creditors, you should contact them; this gives the impression to your creditors that you are trying to repay them. Most lenders want their money to be repaid on time but if you have good communication with them, they may even try to help you by refinancing your debt and reducing the interest rate so that you can pay them back in smaller installments over a longer period of time.

You also have the option of combining all the credit you owe into one consolidated loan as the interest rate will become lower. You can also avail the services of many credit counseling providers who will help you to decrease your interest rates and make a suitable financial repayment plan. They can also give you expert advice on all matters related to your financial debts and how to be free from your debts.

Another option you can take is to refinance your mortgage if you own a house in your name or own the house by mortgage. You could also sell your house and buy a smaller and cheaper house or even take a rented house. But if you do not want to do that you could always refinance your debts by re-mortgaging your house. As you will be paying your monthly installments over a long period of time, it will be much more comfortable for you to repay your debts.

You can also make some kind of formal agreement with your creditors by hiring the services of a debt management company. In this type of agreement, you will be legally bound to pay a certain amount each week or month to your debt management company and if you continue to pay them, your creditors are bound by law not to approach you.

To sum it up, if you are having problems repaying your creditors, filing for bankruptcy is not a good option as there are many other alternatives that you can choose for which is best suited to your unique needs. If you follow the tips given above, you will be debt free within five years or so and can live your life freely again without creditors breathing down your neck or worrying about your finances.