By financen | September 19, 2008 - 5:04 pm - Posted in Bankruptcy

Bankruptcy is a legal process governed by the federal laws that will discharge most of your existing debts with the creditors. There are some debts that will not get canceled in the bankruptcy process. If the most of your debts are the ones that cannot get legally discharged, will it be still worth filing for bankruptcy and have the blemish remark stay on your credit report for seven years?

When a debtor files for bankruptcy, the creditors are given a chance to recover a certain portion of their money as designated by the court. If the debtors do file for bankruptcy, creditors are legally required to stop all collection attempts which provides a temporary relief to the individuals. The real problems start after the bankruptcy is filed. It will be pretty tough to get new credit in the beginning years and if any lender offers you new credit, you will be charged very high interest rate on the amount borrowed. Your employer may not allow you to continue the job and new employer can refuse to hire you in his company. It will be difficult to find a place to live if you do not have a home.

One of the possible ways to avoid bankruptcy is to sell your assets and see if you come up with some money to pay off the existing debts. If you are going to file for bankruptcy, the assets will be liquidated anyway. It will be a good decision to arrange some money by selling your assets and repay your creditors.

If you own a car, try selling the car if it’s worth, and buying a less expensive car. You may be able to use the rest of the money towards paying your existing debts. If possible, try to have one car in the family if you have more than one. You will be surprised to see how much money you can save here.

If you own a home and have a mortgage, consider selling the home to live some place less expensive.

Sell any belongings that you don’t need. This will help you to arrange some money to pay off your existing debts without having to file for bankruptcy.

Increase your income: It is very important to have an extra source of income in order to relieve some of the money pressure that you are experiencing. For this, if you have to do a second job, do not hesitate. You need to be aware that you’re doing all this for a temporary period of time. Once your existing debts are paid off, you will have a better control on your life and you won’t need to take so much stress and fall into debts.

There are many ways to earn extra money like getting a job at night if you are working in the daytime. You can also find jobs on the weekend, or finding ways to earn money from home on your computer or selling some personal items on the ebay.

You can also find odd jobs like doing something for your neighbors (lawn mowing, dog walking, errand service), writing articles for the website owners who pay their content writers. Everyone has some experience and skills that can be used to make some decent money.

This entry was posted on Friday, September 19th, 2008 at 5:04 pm and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.


  1. October 14, 2008 @ 2:18 pm

    I think the key to avoiding bankruptcy for most people is to reign in their spending habits early on. Once the beast grows well out of proportion to the ability of the consumer to repay, I’m not sure one is helped all that much by staying out of bankruptcy. Once your debts exceed your ability to pay and you start falling behind, your credit rating plummets. The next step is for your debts to wind up in the hands of a collection agency. Another blow to your credit rating. The final step short of bankruptcy is for creditors to obtain judgment against you. A debt judgment on one’s record is as damaging as bankruptcy from a credit rating standpoint. Perhaps the social stigma of bankruptcy is avoided but I believe debtors come out better via the discharge given in bankruptcy (assuming your debts are not of the nondischargeable type such as certain tax debts, student loans, child support) as opposed to just allowing the judgments to pile up and dodging the collectors.

    Posted by Joe
  2. March 29, 2010 @ 10:54 pm

    If you are consitering filing a Chapter 7 bankruptcy, the only way you could lose any personal belongings or household goods is if either of the following conditions apply:

    You do not totally own the personal belongings or household goods because you are still making payments on them. (Example: appliances or furniture purchased on credit.) In this case, if you want to keep the item, you can “reaffirm” the debt if you have enough money per month to keep paying the bill and are current on your payments.

    All states have exemption laws that allow a debtor to keep much if not all their pesonal property. Some states also allow you to take federal exemptions which may offer more protection for your property.