Obtaining a bankruptcy discharge is well-known to be an easy process. For most debtors, the appeal of bankruptcy blinds them to the negative fallout of bankruptcy, not the least of which includes a bad credit score, difficulty finding new work, higher insurance premiums, and the fact that the public record of the bankruptcy is available for all to see. In most cases, all a debtor needs to do is devise a repayment plan by increasing income or, more likely, finding ways to reduce expenses.
The key to remaining ahead of your finances and, ultimately leading a debt-free lifestyle includes finding ways to reduce expenses so that you can continue living your life. Since most creditors would rather see some return on your debt, many of them would be willing to accept a reduced principal amount. In some cases, they will not and the debtor will need to take a more aggressive repayment approach up front and slowly ease up (within reason) as the debt gets repaid.
Most people don’t even consider ways to reduce expenses because they are not aware of the money “leaks” present in their financial position. You may be losing money unnecessarily and little lifestyle and expenses management could help you solve the problem.
-Stop using credit cards. Use a debit card instead. -Sit down and plan a budget for all expenses. There are many options available, but the point is to stick to it! -Save. Don’t rely on loans to bail you out each time you need to buy something other than groceries. -If you need to borrow, borrow from family and friends who typically offer interest-free loans and no formal repayment requirements. -Instead of eating out, prepare your own meals. This can be fun and even romantic, thereby killing two birds with one stone. -Look for sales and bargains instead of going for high-cost name brands. -Don’t change your lifestyle too much in one go. Introduce one change at a time if you are able to do so. -If you pay your family’s expenses, you need to involve them in cost cutting measures. -Take stock of essential and non essential spending. Food, clothing, shelter, medical care, education are essential expenses. If you don’t need a second car, a second home, or multiple credit cards consider getting rid of them. Use any profit to repay unsecured debt. -If your income does not cover all expenses, consider taking a second, part-time job until you are able to come out ahead again.
Avoiding bankruptcy allows you to avoid all of pitfalls that come with bankruptcy. While there is no immediate relief with a repayment plan, there is an abundance of information and software available that can help with the process and in keeping you focused on your goal.
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