Bankruptcy in general refers to a legal proceeding involving a person/business which is incapable of repaying outstanding debts. As soon as the proceedings for bankruptcy end, the defaulter is released off the debt obligations acquired earlier. Every year thousands of such cases are filed in the court. Filing for bankruptcy is never recommended as the first choice by financial specialists to any struggling individuals/businesses; it should always be taken as the last resort. Here is a list of top 10 tips to avoid bankruptcy.
10. Learn to manage finances:
It is always advisable that every person should learn and develop some financial acumen. Start investing in the various schemes, pension funds and bonds. Companies should always hire experienced and knowledgable financial advisors and invest in the best possible funds available in the market. It is always recommended to save as much as possible for your rainy days. Imagine how it would feel to have some funds in your kitty as a surprise when the rest of the world is turning its back against you.
9. Income is the key:
Just go back into memory lane and recollect what your business teacher used to teach, if you had one. A business teacher always stresses upon the fact that more the number of active income sources you have, better the future. Try incorporating this idea in your life and see the benefits. There is nothing wrong in trying this golden way for a secure business.
8. Beware of credit cards:
Credit card policy is such a brilliant strategy churned out by the banking industry that it has left many, including you and me, in dire straits. This tool awards you enough monetary power to make you feel like a flamboyant king. The time you realize that your savings account has been depleted by a big margin, it is too late. Therefore be prudent while using credit cards; limiting their use is the best mantra.
7. Avoid joint debt:
We all have friend and relatives who in time of need approach us for financial help, but committing to high stake joint debts are not advisable to avoid bankruptcy. Always ensure that the debt history of the person in question is clear, and that he has enough resources to repay his debt without depending on you. If that is not so and you still go for a joint debt then you’d be taking a huge risk.
6. Learn to be austere:
Simple living and high thinking is truly a helpful mantra. There is nothing wrong in eating a pizza less and cutting on your movie outings. Successful people are those that know how to live life with proper discretion and order. If the day demands you to remain hungry so be it. Learn to be frugal, curb your expenses because budgeting is the order of the day.
5. Dormant sources:
When the going gets tough, the tough gets going. Don’t forget to make a list of sources that could be utilized in generating revenue in your dry days. For example, if you possess some agricultural land that has never been used, try selling it off to meet the debts or investing in it with the left over amount. Try reviving all income sources which are dormant in order to avoid bankruptcy.
4. Balance sheet:
Normally people don’t like preparing balance sheets but is one of the best tips to avoid bankruptcy. The underlining point is that it is always better to weigh your financial health in terms of a balance sheet. It keeps you aware about your fiscal health and indicates when the situation is about to get out of control.
3. Pay regularly:
It is always advisable that you pay your debts in time. It is not a big deal if you make up your mind to do so. Avoid rerouting the cash kept for proposed payment for the coming month toward some miscellaneous means. Make it a habit to pay installments regularly and you will see a new turn in your life making your future more colorful.
2. Get expert advice:
It is always better to hire an expert financial advisor as soon as you sense your fiscal health defaulting. It is a general practice adopted by the wise few. There is nothing wrong in shedding some extra dollars for availing the services of a financial advisor than getting them wasted on useless activities. Follow his directions properly to avoid bankruptcy.
1. Creditors understand:
If everything goes wayward for you and no solution is clicking, then try negotiating with the creditors. It is a general misconception that banks don’t listen. They do only if you propose a well structured strategy to them. Try convincing them for debt restructuring and smaller monthly payments. Rest, wish for the best and never lose hope in life.