Avoiding Bankruptcy is a Possibility

Desperate financial times sometimes call for desperate measures like bankruptcy but just know that avoiding bankruptcy is possible. If you are serious about attaining financial freedom and peace of mind while honouring your debt, there are several ways of doing so. Without bankruptcy on your record, you could eventually regain a sterling credit rating.

Bypass Bankruptcy with IVAs

An Individual Voluntary Arrangement, also known as IVA, is a legal contract with your creditors to repay your debt - either in full or for a mutually agreed upon reduced balance. A time frame for repayment is chosen and this payment arrangement typically is checked regularly by an independent accountant or solicitor to ensure you are in compliance with the terms. You can bypass bankruptcy with IVAs and save your credit history but be aware that the repayment schedule can be very exacting with little room for error or those emergencies that drain your discretionary income.

Loan consolidation

A debt consolidation loan is an option to prevent bankruptcy but it is often not advised unless you are committed to changing your lifestyle and spending habits permanently. Often, people in debt take out a consolidation loan to restructure debt but do not change their lifestyle to live within their means. Because most of these loans are secured with property such as your house or car due to your poor credit history, you could end up losing them if you do not adhere to the repayment plan for your loan.

Avoiding Bankruptcy with a Debt Management Company

Seeking a professional financial opinion through a debt management company may be your best option to circumvent bankruptcy. With the help of a debt counsellor, an arrangement can be made with all of your creditors, typically for a reduced repayment schedule. In fact, you may also buy yourself extra time to repay debt and bypass bankruptcy. Many creditors will work with licensed debt management companies and honour the repayment plan negotiated. They know that if you declare bankruptcy, they likely will never recoup their money. By working with you through the debt management company, they will get paid something. Keep in mind that this option may put some dings on your credit history but it is nothing compared to a bankruptcy. Most plans negotiated can help you be debt free within five years, much sooner than trying to negotiate on your own.

As you can see, there are several ways to manage your debt and bypass bankruptcy. Your individual situation will dictate which option is best for you.