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In order to avoid bankruptcy debtors should investigate all available debt relief options. The Internet can be a good tool to locate personal finance information. However, consumers must use caution before spending their hard earned cash on advertised products or services which claim to reduce debts. The easiest way to avoid bankruptcy is to develop a household budget and commit to sticking to it, no matter what. People are often unaware of how much money is wasted on unnecessary items. Irresponsible spending habits quickly exhaust bank accounts; leaving debtors with less money than month. One of the biggest mistakes consumers can make is to use credit cards for daily expenses. Charging a daily cup of coffee and fast food lunch can add up to hundreds of dollars in interest which in turn creates additional debt. Debtors cheat themselves of their own money when they do not pay monthly credit card bills in full. Debtors may be able to prevent bankruptcy by becoming aware of where they spend money. The simplest way to determine where the money goes is by tracking every expense. Most people are surprised to discover how much money is spent on items they don't really need. Many people believe filing personal bankruptcy will free them from debt bondage. However, the cost of filing bankruptcy hits more than the wallet. In addition to court filing fees and legal expenses, debtors must repay a portion of debts by establishing a Chapter 13 payment plan. Additionally, new bankruptcy laws enacted in 2005 require bankruptcy petitioners to obtain professional credit counseling. Debtors must abide by guidelines set forth in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) or run the risk of having their petition dismissed. Credit counseling must be conducted by an agency approved by the U.S. Trustee. Once counseling is completed, debtors submit a certificate of completion through the court. Debtors are allowed to obtain credit counseling up to six months prior to submitting their bankruptcy petition. Credit counseling can sometimes help debtors avoid bankruptcy altogether. Credit counselors review debtors' income, expenses, and spending habits to determine which debt relief options are best suited. In some cases, credit counselors can negotiate with creditors to reduce outstanding balances, lower interest rates, and eliminate late fees and penalties. Debt consolidation might be a viable option for debtors who own real estate with accrued equity. Homeowners take out a home equity loan using real estate as collateral. Funds are used to pay off high interest loans and credit card debts. Interest rates assessed on real estate loans are significantly less than interest rates assessed for unsecured loans and credit card companies. Transferring debts to low-interest loans can save borrowers hundreds, if not thousands, in interest charges alone. However, using real estate to secure loans can be risky. If borrowers default on home equity loans they could potentially lose their property to foreclosure. As the cost of living continues to rise, consumers must become proactive and pay attention to their spending habits. Several options are available for reducing monthly expenses. Common ways to reduce expenses include: enrolling in utility budget plans; reducing cell phone plans; bundling services such as cable, Internet, and home phone; and using grocery coupons and manufacturer rebates. If filing personal bankruptcy is the only viable option, debtors should take time to become educated about the process and comparison shop bankruptcy lawyers. It is important to understand that bankruptcy remains on credit reports for 7 years and can prevent consumers from obtaining credit of any kind for two or more years.
| About Author Simon Volkov : | |
Obtain additional bankruptcy information from real estate investor, Simon Volkov. His website offers a comprehensive personal finance article library which covers topics of how to avoid bankruptcy, debt relief solutions, and tips for hiring a bankruptcy lawyer available at http://www.SimonVolkov.com.
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Article Url: http://www.bharatbhasha.net/finance-and-business.php/362909Article Added on Friday, March 30, 2012
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