Avoiding Bankruptcy
Filing bankruptcy creates a permanent public record that follows debtors for at least 10 years. The trend is also clear - insurance companies, banks and employers use credit records to estimate risk. Because all large corporations today use pricing-models to estimate risk as a further means of finding the last penny in profit, the cost of bankruptcy must include the long-term effect of filing. Insurance costs, mortgage rates and salary growth will all be affected. As a result, anyone who considers filing bankruptcy should thoroughly investigate all options before reaching a decision.
Top 10 Ways to Avoid Bankruptcy
- Find a second job or start a part-time business.
- Hire a qualified financial advisor.
- Informally negotiate debts for lower payments.
- Formally negotiate liability through an attorney.
- Secure debt consolidation loans with home equity.
- Refinance debt-consolidation loan terms.
- Consider new debt consolidation loans.
- Credit counseling services operated by private companies.
- Credit counseling services operated by non-profit organizations.
- Volunteer for participation in supervised debt relief services.
How to Avoid Bankruptcy Forever
For most people, filing Chapter 7 or 13 occurs only once in a lifetime. About 1.5% of the U.S. population files each year (1 in every 80 households). Of these filings, less that 5% represent is a second discharge. Based on the general population, the odds of a second discharge are about one in 1600. What do debtors learn from the first discharge process? How do they change their money management technique to prevent future filings? The answer is deceptively simple. For the moment, consider a similar event - filing for divorce - that frequently results in separate bankruptcy filings.
Statistically, approximately 56% of all U.S. marriages end in divorce. However, this statistic is misleading. If you consider only marriages that began when the youngest spouse was at least 26 years old, the national rate for divorce drops to 22%. For each year below the age of 26, for both spouses, the rate of divorce dramatically increases. Love may be in the air, but divorce is in the water for our nation’s young adults.
Age alone does nothing to prevent divorce or filing bankruptcy. However, along with age, each persons experience, wisdom, and interest in improving quality of life often result in a more realistic evaluation of options available. Less sales hype accepted, more facts demanded. Fewer promises, more performance. People learn through experience that cash today is better than a promise tomorrow. This shift in values results in personal satisfaction while last year's latest fad fades into memory. As financial security grows in importance, profits multiply as naturally as tending a favorite garden.
