Avoid Bankruptcy

Posted by Shu Zheng

Some people think that it is easy to file bankruptcy, but in fact, it is a life-changing event that will cause lifelong damage.

There are two types of bankruptcy. Chapter 7 Bankruptcy, which is total bankruptcy, stays on your credit report for 10 years. Chapter 13 Bankruptcy, more like a payment plan, stays on your credit report for 7 years. In 2005, the new laws made it more difficult to file Chapter 7 bankruptcy. With Chapter 13 bankruptcy as the other option, you may end up paying 25% - 75% of your debts. Bankruptcy is for life. Loan applications and many job applications ask you if have filed for bankruptcy.

Most bankruptcy can be avoidable. There are four ways to handle it:
· Sell assets to pay debt.
- Selling your assets may be inconvenient to you, but it is worthwhile to do so rather than ruining your credit.
· Pay your way out of debt.
- You can cut your expenses or increase your income.
· Negotiate with your creditor.
· Consumer credit consulting.

Sources:
1. http://www.americandebtcontrol.com/bankruptcy_alternatives.htm?gclid=CJfD6OfP0JkCFYZM5Qodaw3Muw
2. http://credit.about.com/od/debtmanagementsolutions/tp/how-to-avoid-bankruptcy.htm
3. http://www.daveramsey.com/the_truth_about/bankruptcy_3018.html.cfm