Selling Some of Your AssetsSell whatever you can spare and use the money to pay off your debts. Take action immediately when you notice you can't afford make payments anymore. If you wait until you're behind on payments, it may be too late. You can sell your furniture, jewelry, and electronics on eBay, Craigslist, even in your front yard. Is this a radical way to avoid bankruptcy? Perhaps. Many people can't get past the inconvenience of living without their things, but you can adjust and it's only temporary. It will help you avoid bankruptcy and spare your credit.
Can you afford to pay off your debts over a period of time? You'd have to if you file Chapter 13 bankruptcy either to save an asset or because you failed the means test for Chapter 7. If you take a closer look at your budget, you may be able to cut out those nice-to-haves like cable or satellite television, landline and cell phones. These are examples of some expenses you can cut without too much pain.
If you're already living on a bareboned-budget, how about increasing your income by working overtime or part-time? Hobbies and skills can also help you get some extra money to avoid bankruptcy. Here are 90 ideas for getting extra money to pay off your debt.
Ask Creditors to Help You Avoid Bankruptcy
Your creditors would rather get some money from you than no money at all. Let your creditors know you are having financial difficulty and want to avoid bankruptcy. Express your willingness to pay the debt and ask if they can help ease the burden by lowering your monthly payment or decreasing your interest rate (or both). Many credit card companies and banks have hardship programs intended for this type of situation.
Before you enter a hardship program make sure your monthly payment and interest rate actually go down. Otherwise, you could be stuck with an even higher minimum payment.
If you don't have luck working with your creditors on your own, enlist the help of a professional. Find a consumer credit counselor who has experience working with creditors to get your payment and interest rate reduced. The new bankruptcy law requires credit counseling prior to bankruptcy filings anyway so it's worth it to strongly consider credit counseling as a bankruptcy alternative. The debt management plan payments may seem out of reach, but if you look, you may find holes in your budget that allow you to make the payments.