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Declaring Bankruptcy: Easier Said Than Done

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Declaring bankruptcy has serious consequences like increased difficulty in obtaining loans, apartments, automobiles, credit cards etc. And even if you obtain these, you might be required to pay increased interest rates for the same. Most of you, who are contemplating on filing bankruptcy, are required to have a good idea on the same. If you are single, this would be very well your own decision, but if you are married, then this would be a family affair.

Check for all the debts and outstanding you owe. If you find the debt amount exceeds your earnings, than you have only two options to go for. Either drastically cut down your life style by selling off your bigger house and getting a smaller one, get a second job, part-time one etc or file for bankruptcy. But never be in the notion that filing for bankruptcy would not bring any changes to your lifestyle. It would obviously do, and would also bring drastic effects on your credit rating for the next ten years.

Any layman can easily tell that the first option is the best one rather than declaring bankruptcy. For this you need to chalk out a plan, on how you can embark ...
... upon frugal living by living on your earnings, and if possible by increasing your monthly payments towards loans.

We have devised three strategies to help you out in these efforts namely,

Chop, slice, Burn and Sell
To start off, try with the small soft cuts like using the substitute products instead of going for its costly counterparts. For e.g. avoid the gym membership and try for an early morning jogging at park. Try to avoid going for costly dinners, ordering food, and spending on latest cars or car accessories. Harder cuts come in the form of selling off the unnecessary items from your wardrobe or store rooms. Probably someone in the pawnshop or online shopping portals might be interested to buy it. By this you can raise money from items which otherwise would be rotting in your home uselessly. Also try to use low interest cards, and try to save money for emergencies, like e.g. an emergency fund.

Meet your creditors.
Visit your creditors or lending institutions, and hold a good rapport with them. For e.g. start off with the bank where you have a good payment history and convey your current standings. Try to initiate talks on lowering the interest rates. They would be more than willing to relent to it. This is because in cases when your account goes to the collection agencies after default, banks rarely get paid in full, leave alone cases of bankruptcy! If in case your accounts has already been handed over to some collection agency, use the same knack to deal with them and try in a very polite manner on negotiating for lower interest rates or lowered sums. But whatsoever measures you follow, try to get the newly amended one in writings.

Take the oath never to fall back on it
Once you are done with the debt payments, promise to yourself that you would never trudge on the same path of incorrect money management policies. Try to maintain solid personal finances, as this is the key to a happy life, free of any financial problems. Keep the word ‘over spending ‘away from your dictionary of living and embark upon frugal and economic living. This would never let you swallow the bitter pill of debts again!
Ensure that if you do end up filing bankruptcy, due to mismanagement of money, find out ways to come out of it also.

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