How to Successfully Avoid Bankruptcy
- 1). Contact all of your creditors in writing. Explain to your creditors that you are experiencing financial issues that render it impossible for you to make the current minimum monthly payments required on your accounts. Notify these creditors that absent some sort of modified payment plan, you will default.
- 2). Advise your creditors that you intend to file for Chapter 7 bankruptcy protection if you cannot develop new payment plans. Through a Chapter 7 bankruptcy, your obligation to creditors is discharged. Of course, you want to avoid bankruptcy, but make it clear to your creditors what is in store if you cannot develop more manageable payment or settlement plans.
- 3). Seek loan modifications for any home mortgage or automobile loan that is outstanding. Once again, advise these particular creditors that if you cannot obtain relief through a loan modification, you will face the prospect of seeking bankruptcy relief.
- 4). Apply for a debt consolidation loan. In some cases, obtaining a debt consolidation loan makes sense for a debtor. The benefits of a debt consolidation loan include a reduction in the amount of money you pay to creditors each month, elimination of late charges and other penalties, and the convenience of one monthly payment on your debts.
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