Bankruptcy

Achieve A Debt Free Life Without Filing Bankruptcy

Just because your debt situations sounds to be overwhelming one, it does not mean that bankruptcy is the only option available out there. There can be several better alternatives, which you can use to achieve a debt free life without filing bankruptcy. Everyone in the United States of America is following the “American Dream”, which is to achieve a financial life where everyone has a home, a car, and everything that is necessary for a luxurious life. Some people are following this dream blindly without any proper financial planning. The end result is that almost every American citizen is now in debt. Thousands of them are on the verge of bankruptcy. Many predatory lending programs, such as payday loans, have made things worse. Following is a brief rundown on four bankruptcy alternatives that can help you deal with your debt problems quite effectively.

Start Living Within Your Means

This is the time to downgrade your life, at least until you regain control of your debts and finances. You can achieve a debt free life without filing bankruptcy if you make some difficult compromises, such as by reducing your expenses to as low as possible and by increasing your income to as high as possible. Both things are possible, but obviously, it is not an easy task. In order to increase your income, you will have to work overtime or get a second job. Reducing expenses means you will have to avoid impulse shopping and work on a strict budget plan. Depending upon the severity of your debt situation, you may even have to consider living a frugal life, which leaves very little room for expensive entertainment. However, it does not mean that people who practice a frugal life have no entertainment in their life. It is just that you have to avoid all those entertainment options that damage your wallet and bank account. There can be a wide array of free entertainment options, such as going for a picnic in a nearby park and spending some time together with your spouse and kids. So, when I say you should consider downgrading your life, I only mean you to start living within your means, in a way that allows you to save as high as possible and spend as little as possible.

Start Living A Cash Only Life

You can easily put yourself on the road to achieve a debt free life without filing bankruptcy and to have better control of your finances if you start living a cash-only life. It means this is the time to lock your credit cards at a safe place and then forget about it. The convenience of using credit cards often result in impulse purchases, which can eventually cause a serious dent on your finances. When you use cash, you will have a better idea on how much money you have, how much you can afford to spend, which purchases are necessary and which purchases you can afford to avoid.

Start Paying Off Your Bills Little By Little

Just because the outstanding balances on your bills and debts are growing very fast and you find it impossible to pay them off all at once, it does not mean that you should simply sit back and watch them grow. If you are serious about achieving a debt free life without filing bankruptcy, you must start paying off your bills, no matter how small the payments are. You can do this quite effectively by using the debt snowball strategy. As per this strategy, you first have to write down the basic details of all your debt accounts (the name of the lender, the type of loan, the outstanding balance, the rate of interest) on a paper. Then, you can sort them on the basis of which ones are the most important and which ones are charging you the highest interest. Start contributing a significant part of your savings toward the repayment of those priority loans. Keep on calculating on paper that how fast those debts are reducing. When you see your debts reducing on paper, it will motivate you. Once you eliminate the high rate loans, you can jump toward the repayment of the low-priority and low-rate loans. You can achieve better success with this strategy by talking to your lenders and convincing them to make the terms a little more favorable to you.

Debt Settlement Programs

Even in extreme situations where the outstanding debt balances are too high to pay off, it is very much possible to achieve a debt free life without filing bankruptcy. For example, if you are in a situation where you have lost your job or the source of regular income, you can request the lenders to consider accepting the payment as part of a debt settlement program. As per this program, the lender may allow you to pay 30% to 50% of the total outstanding debt balance in full and final settlement of the entire debt. Though even a debt settlement program may seriously damage your credit score, the damage will not be as severe as it can be in case of bankruptcy.

Remember, if you want to achieve a debt free life without filing bankruptcy, you will have to do some hard work and demonstrate a great deal of financial discipline.


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