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Going through the filing process for bankruptcy is one of the most truly terrifying things any homeowner can experience. Even thinking about it probably makes you uncomfortable.
And that feeling is for good reason…
Getting out of debt is hard enough. Getting out of bankruptcy is something else entirely—it can be one of the most difficult challenges anyone will ever face.
It’s like trying to climb out of a quicksand.
But there is something you can do about it. Avoiding bankruptcy starts with making wise financial decisions and can end with you getting out of debt entirely if you make the right choices.
If that sounds like a good deal, keep reading! We’ll give you 5 tips for avoiding bankruptcy, as well as a pro tip for unlocking your entirely debt-free future.
Let’s start with the potential consequences of filing for bankruptcy.
First of all, your credit score will drop significantly.
As a result, you won’t be able to borrow money at market rates for up to 10 years. This is what we mean by ‘climbing out of quicksand’—if you have to borrow more, you’ll go even deeper into debt.
You may be required to attend credit counseling or financial education classes as well, but that’s not the worst part.
If you file for chapter 7 bankruptcy, your lender could take certain possessions to pay back your debt. These possessions can include jewelry, collectibles, antiques, second homes, boats, RV’s, and artwork.
For more on the consequences of filing for bankruptcy, click here.
Now, let’s dive into the strategies you can use to avoid bankruptcy…
If you’re like most people, your lifestyle revolves around your budget. Of course, if you don’t budget effectively you run the risk of going bankrupt eventually.
If you catch the problem early, there are a couple rules you can follow to keep a tight, effective budget:
• The 28/36 Rule: Essentially, you’ll want to spend no more than 28% of your gross monthly income on your monthly mortgage payment, and no more than 36% of your gross monthly income on housing-related expenses and other debt payments (car loans, student loans, credit card payments etc.)
• The 50/30/20 Rule: This rule states that 50% of your budget should go to necessities: utilities, rent or mortgage payments, insurance, car payments, and other debts 30% of your budget should go to the things you want: a family vacation, going out to eat, a new cell phone, etc. And 20% should go towards investments: any brokerage/investment accounts, your 401(k), savings bonds, etc.
These are great rules to follow at first, but the truth is, you might need to take more drastic budgeting measures if you’re worried about bankruptcy. Consider:
These aren’t considerations anyone wants to make, but that’s the unfortunate reality of debt and bankruptcy.
Your lender won’t stop trying to get their money back—so, you may end up losing many of the items we mentioned anyway.
If you tackle your debt problem early, your lender may be more willing to work with you at the negotiating table.
You can think of bankruptcy as a lose-lose situation for you and your lender in most situations.
Obviously, you might lose a lot of money and assets, and your lender typically won’t get all of their cash back.
So, if you talk with your lender they may allow you to extend your payment period, reduce your monthly payments, waive your late fees/increased interest, or accept a sum of money less than what you owe…
Debt settlement should be one of your last-ditch efforts to avoid bankruptcy. Essentially you’ll be negotiating with your lender to pay off a certain percentage of your outstanding debt.
For example, your lender might agree to let you pay off $5,000 of your $10,000 to save you (and your lender) the impacts of filing for bankruptcy.
There are a couple things to be aware of with this method…
Many people utilize a debt settlement company to negotiate with their lender. This can help you get a successful settlement without the headache of doing it on your own, but you’ll likely owe fees after an agreement is reached.
Most debt settlement companies ask you to stop paying off your monthly debts so you can save up to pay off part of your debt in a lump sum. As a result, your credit score will probably take a hit.
Debt consolidation is one of the best decisions you can make if you’re in any amount of debt—not just if you’re nearing bankruptcy.
Essentially, debt consolidation combines all of your ultra-high interest debts, and you pay them off with a single low-interest loan.
The result is some or all of your debt paid off in less time than you probably expect.
So, what’s the catch? Well, when you consolidate your debts, you’ll free up a lot of cash…
That makes spending that extra cash a slippery slope. So, you’ll need to stay on top of your budget.
So, what if there was a method that took the guesswork out of budgeting, spending, and paying off your debts?
What if there was an all-in-one debt consolidation account that could track your debts, expenses, and payments, giving you a debt-free future in as little as 7 - 10 YEARS with NO changes to your current lifestyle?
Well, you’ll be glad to learn there is!
It’s called the Money Max Account, and it really can help you pay off every single one of your debts in as little as 7 - 10 years!
In fact, Money Max has already helped people just like you save over $2 BILLION in mortgage payments and other debts.
So, how does it work?
Well, it starts with debt consolidation. Your debts go into the Money Max Account, and it uses advanced banking algorithms to tell you how much you should pay and when you should pay.
By using this strategic payoff method, you can be out of debt in less time than you ever thought possible.
Not to mention, Money Max saves you the headache of budgeting. It does that for you too!
That means you won’t have to think about bankruptcy ever again—if you play your cards right, you won’t have to think about debt either!
Your debt-free future is sitting right in front of you…
Are you going to seize this potentially life-changing opportunity?
If your answer is yes, good choice! We’re ready to help you get started on the path to a secure, comfortable financial future.
Visit our website to learn more about the Money Max Account and what it can do for you and your financial future, or give us a call! A United Financial Freedom representative is standing by to answer all of your questions.