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3 Alternatives to Bankruptcy

There are times when you'll feel there is nothing more that you can do other than to declare bankruptcy. However, before you even consider this option, you need to think about these dangers:
- You will have the bankruptcy record on your credit report for at least the next 7 years
- Owing to the bankruptcy declaration, all your prospective creditors will perceive you as a high-risk investment, and charge you high interest rates
- You will often have to give a very large down-payment for mortgages
- Some creditors will not lend you money unless you have collateral and/or a co-signer
- In spite of your best efforts a bankruptcy record cannot be removed from your credit record before 7 years; this is even when you take utmost care with your payments post bankruptcy
Look at the above conditions and you will realize how debilitating the option of declaring bankruptcy is. Therefore, it is worth it to try your best to avoid this path of action. Here are three alternatives that you might consider:
1. Use "hand loans" – appeal to your relatives and close friends for bridge-gap loans so you can pay the high interest loans first. Use this money to pay off the credit card loans and any other high interest loans because these are what got you trapped into debt.

Most people shy away from asking, anticipating a negative response. Keeping in mind the disaster that you are headed for, you owe it to yourself to try. Ask for help. In most cases, you will be pleasantly surprised with the answer.

2. Consolidate your debts – while it is true that debt consolidation dips your credit score, its impact will be much less than bankruptcy. Debt consolidation usually comes with a feasible solution. Some people even become suicidal in their frustration to contain their deteriorating financial status. They find it impossible to pay the bills, and not paying them pushes them into further trouble.

Debt consolidation gives them a way out. Once you sign up for such a program, you will be able to breathe freely knowing that you are walking on the pathway that will free you from debt. Though a little slow, it is a path that will end on a positive note – unlike bankruptcy.

3. Generate more income – this is a no-brainer. Yet, very few people think of this as a solution to free themselves from debt.

There are plenty of things you can do to monetize your free time. Look around in your neighborhood and offer your services. This could be something in your line of profession – with businesses near your residence – or it could be something that people need, such as babysitting, tutoring, running errands, etc. No job is too small if it contributes to your kitty.

You also have the alternative to earn through freelancing on the Internet. Look on websites such as www.elance.com for some excellent leads in whatever your profession is. You can also apply for Adjunct Professorship it a Universities around your place of residence, if you are thus qualified or work as a Consultant.

The list is endless. The point is that you can very well add to your income so you can pay off your debts faster. Anything is better than bankruptcy. Try out all your available avenues before you throw in the towel!

 

The Vital Secret to Financial Self Sufficiency

The title attracts you, right? Everybody wants to be financially self-sufficient. However, very few really are.

Why? Look at yourself while asking this question. In most cases, your needs will seem to expand commensurate with your income. Somehow, the needs seem to always be just a little more (and in some cases, much more) than what you can afford. If you have found yourself in this situation much too often, it's time you learn the one vital secret that will set you free.

This secret is called "Budget."

Budget Your Income

Many people think of budgeting as "something I know I should do, but never can" and leave it at that. Do you really want to be free of debt? If your answer is "yes", sit down now, take a pencil and paper and write down your budget - Today - Now!

Budgeting is an art that needs to be mastered – though it's not difficult to do so. Start with your savings. You must keep aside 1% - 25% of your income as saving. This is non-negotiable.

Then you list the "must-haves" or essentials. These are groceries, utility bills, medical insurance and all such things that you cannot do without. Once this is complete, go to the fun items that give you pleasure such as dining out, occasional shopping for a gift and the like. Add 1% - 10% for charity and here you are – you have a budget!

Emergency Budget

When you are down with more bills to pay than you have income, run the "emergency" budget. This is a budget that consists of only the essentials. At such times, you need to subtract all expenses that exclude the must-haves (and savings) and continue to adhere to this budget until you have completed repaying all your outstanding bills.

Why Budgeting Is Vital

It's important to "plan your money." But you will never be able to do so, until you know exactly where your money goes.

Very often there is an acute drainage of resources on seemingly innocuous expenses such as daily doughnut and cappuccino, or having chips or coke. Your cigarettes, party expenses, sudden impulsive shopping sprees, beer runs, etc. can work out to huge amounts unless you have them calculated on a monthly basis and checked.

When you budget, you will be able not only to keep superfluous expenses in check, but also put your money to best use. This does not mean you can't have any fun. Have an amount allocated to "fun" as well, and ensure that you stay within that budget.

The beauty of the budget is that you will be able to have everything you want the way you want it – because once you plan it all out, you'll be able to do much more with your money. This is why budgeting is known as the most vital secret of financial self-sufficiency; or the key to optimal financial management.

Resources

The Credit Repair Organizations Act
The Fair Debt Collection Practices Act (FDCPA)
Fair Credit Reporting Act (FCRA)
Consumer Credit Protection Act
The Fair Credit Billing Act
The Equal Credit Opportunity Act (ECOA)

 

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Quote of the Day

Don't waste your life in doubts and fears: spend yourself on the work before you, well assured that the right performance of this hour's duties will be the best preparation for the hours or ages that follow it.
Ralph Waldo Emerson



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