Staying out of the Red: How to Keep Your Business out of Bankruptcy

Just like a person, a business must find a way to pay its bills and keep a sufficient amount of money in the bank. Furthermore, companies also have their own credit scores that go up and down based on its ability to manage money. Good money management can keep a business thriving for years while also keeping it far away from a bankruptcy court.

Don’t Borrow Funds Unnecessarily  

Prior to borrowing money from a bank, friend or other ABL lender, it is important to know how that money will be used. It is also important to know how that money will be repaid and when. An accountant or other financial adviser can help a business owner determine if a loan is an appropriate way to help the company grow.

Don’t Overspend

One of the many problems that most businesses have, especially if they are still in their startup phase is they tend to overspend. The problem with overspending should be obvious, but by doing so, you may not be able to pay for the necessities for your business to survive. 

You have to be able to pay the bills and pay your employees properly. But overspending can be very easy to do. There are going to be times where you have unexpected expenses that come up. 



However, if you budget your money properly, not only should you be able to take care of those unexpected problems, you should be able to take care of all the necessities in your business and still turn over a profit. It is tricky, but if you are able to pull this off in your business, you will be successful in the long run.

Keep Labor Costs in Check

A company’s employees are among its most important asset. While you can attract quality talent by offering higher salaries and other perks, it could have negative consequences for your bottom line. 

Make sure that you pay what your company can afford to spend on human resources even if that means paying your people less than the competition. In some cases, you can make up for a lower salary with more robust health benefits or extra vacation throughout the year.

Don’t Expand Too Fast

Expanding too fast can cause you to overspend money in your business. When you try to expand, you have to be able to anticipate all of the unexpected expenses that may arise. Although opening a second or third location could mean additional revenue, it will also mean additional costs. 

It could also mean that you need to hire managers and other personnel to properly oversee these locations. By growing at a controlled pace, you can increase revenues in a consistent manner and ensure that each location is making enough money to justify its existence.

Make Use of Credit Monitoring Tools

Using tools like CreditRiskMonitor can make it easier for a company to determine where it stands compared to the competition. This may help a business take action to cut costs, pay down its debt faster or otherwise become a leaner organization. 

By taking these steps, it could be easier to secure an investment or otherwise increase its revenue and gross profit.

As a business owner, you want to make sure that your company is as financially healthy as possible. This makes it more likely that the business will be around for the long-term, which may instill greater confidence in employees, suppliers and investors. 

Ultimately, it makes it easier to grow your business from a small business into a regional or national power.

4 Financial Steps to Protect Yourself from Bankruptcy

Dealing with overwhelming debt can be a serious burden. Dealing with bankruptcy, however, can often be just as frustrating. Bankruptcy can do a number on your credit, after all. If you want to safeguard yourself from all of the stresses of bankruptcy, these financial tips can be highly effective and useful.

Work on a Budget

Assess the amount of money you use on a monthly basis. Set up a budget that can keep you accountable and focused. Tell yourself that you won’t go over your designated budget no matter what, too. 

If you want to take charge of your monthly spending patterns, maintaining a budget can make a strong foundation. You can handle your spending by using cash for anything you get. You can do so by throwing all of your credit cards away as well.

Say Goodbye to Frivolous Purchases

Viewing your purchases in a totally new light can help you steer clear of bankruptcy. Refrain from buying anything you absolutely do not need. If it’s not rent money or food, then there’s a strong chance that you can cut it out. 

Say goodbye to eating out at restaurants. Say goodbye to cigarettes, costly cable television packages, movie theater trips, spa pampering days and more as well. 

You can even save money by cancelling your fitness center membership. Jogging at the park can be just as effective.

Reach out to a Bankruptcy Lawyer

Attorneys who have bankruptcy expertise can supply you with comprehensive insight that can potentially help you keep filing at bay. 

If you want advice from a legal professional who knows all of the pitfalls that get people on track to bankruptcy, a lawyer consultation can be a superb idea. Book a consultation with a bankruptcy lawyer who possesses a blue-chip track record.

Put Your Property up for Sale

Putting property up for sale can often help people who want to stay far away from bankruptcy. If you have a vacation home that no one occupies, you can think about selling it. 

If you have a vehicle that you rarely use, you can consider putting it up for sale, too. Contemplate any and all items you may have with high value. Selling rare antiques may help you dodge bankruptcy filing.

The thought of bankruptcy shouldn’t make you lose your cool. If you’re calm, you may be able to think your way out of a scary debt situation. The answer is to think things through rationally.

Bankruptcy Options: 4 Ways to Get Back on Your Financial Feet

Declaring bankruptcy is always a last resort when you find yourself in a financial hole. No one likes having to start over. Here are some tips to help get you back on your feet.

Know Your Options

You need to know what options are available to you. Set up a meeting with a bankruptcy lawyer so that you can re-establish your financial future. They can walk you through what your next steps need to be to recover. 

If you are just starting the bankruptcy process, they can help you through it. This way you will be able to make informed decisions. They might be able to help you settle any debt that you have in order to avoid any pitfalls.

Address the Cause

Bankruptcy was not something that happened overnight. It involved a series of poor decisions that lead you down this road. Before you can start the process of recovery, you need to first understand how it occurred. 

Frequent overspending and not watching your bottom line is the likely culprit. You need to create a budget that you can live within. Living paycheck to paycheck leaves you vulnerable. You should have an emergency fund for any unexpected expenses.

Establish New Credit Lines

After a set amount of time has passed, you will be able to apply for a secured line of credit. This means that you have the money to pay off the line of credit set aside in a savings account. 

If you fail to pay it off, the bank can take the funds that you used to secure the card. Once you have established this line of credit and reliably paid it off, you can apply for an unsecured credit card. Since you are still considered high risk, the interest rate will be higher than a normal card.

Set Budget Goals

It will take seven to ten years for the bankruptcy to fall off of your record. During this time, any financial troubles will set you back further. You need to stick to your budget and create a buffer. 

Opening a savings account and putting money aside each month will alleviate any unexpected costs. Make sure to check your credit report often. Having financial goals will allow you to better prepare for the future. You don’t want to find yourself back in bankruptcy because you overextended yourself again.

Millions of Americans declare bankruptcy each year. Having a budget and a safety net are the best ways to avoid financial hardships. Use these tips to recover from your bankruptcy.

Why More and More Retailers are Filing for Bankruptcy

From family-owned businesses to national chain stores, more and more retailers are filing for bankruptcy. Statistics show that retail bankruptcy filings were up more than 30 percent in 2017 from the year prior. 

So, what’s driving this change in the retail landscape, and what can retail business owners do to protect themselves?

The Transition from Offline to Online Shopping

Several factors play a role in the increasing number of retail closings, one of which is the trend of online shopping. It turns out that 51 percent of US Consumers prefer to shop online. Buying goods over the internet is often easier, more convenient and even cheaper. 

As a result, consumers have shifted their shopping habits from local shopping centers and malls to the internet.

Another issue is that supply, in many cases, outweighs demand. Retailers continue to open new stores in hopes of increasing revenue. With consumer demand stagnant, however, this doesn’t happen. 



Instead, retailers are left with a surplus of goods and high overhead costs. Retail business owners who want to survive must learn to adapt to market changes while providing a valuable service for consumers.

Major Retailers Filing for Bankruptcy

Even major retailers aren’t immune from these market changes. In September 2017, just months away from the holiday shopping season, Toys ‘R’ Us filed for Chapter 11 bankruptcy protection. This prompted the national kids’ toy retailer to close some 200 stores.

Payless ShoeSource also fell into hard times last year. In April, the shoe store filed for Chapter 11 bankruptcy protection, announcing the closure of approximately 800 stores.

Other retailers that have filed for bankruptcy protection in recent months include HHGregg, RadioShack, Eastern Outfitters, Gander Mountain, Gormans, Wet Seal and Aéropostale.

How Bankruptcy Protection Can Help

Filing bankruptcy doesn’t necessarily mean the retail business will close. On the contrary, many retailers file it to keep their business alive during periods of financial hardship. 

When a retail business owner cannot pay his or her bills, bankruptcy offers a second change. As a business owner, you can keep a bankruptcy lawyer like the Law Office of Barbara B. Braziel on call.

There are several different types of bankruptcy, including Chapter 7, Chapter 11 and Chapter 13. With Chapter 7, the business’s assets are handed over to a trustee who oversees its liquidation for the purpose of paying off debts. 

Chapter 11 and Chapter 13, however, typically provide retailers with an opportunity to continue their business. The retailer may arrange a reorganize their business structure, liquidating assets and closing stores, and he or she may agree to a repayment plan with creditors.

There’s an undeniable change happening in the retail landscape. However, retailers can overcome financial hardship by consolidating their operations and filing for bankruptcy protection.

How to Decide if Bankruptcy is Right for You and Your Situation

There are several things bankruptcy can do and several things it cannot do. Bankruptcy can discharge most unsecured debt such as credit cards, past due utility bills, business debts, medical bills, and civil court judgments. 

Secured debts such as mortgages and auto loans can be discharged if you no longer want to retain the property. Bankruptcy cannot discharge debt for child or spousal support, student loans in most cases, restitution owed for damages or injury to others, payroll taxes, and more.

Qualifying for Bankruptcy

Debts discharged in bankruptcy can depend on the type of bankruptcy you file. Chapter 7 discharges all allowable debts and leaves you with a clean slate. Chapter 13 is debt-consolidation that allows you to pay off your debt within a few years. 

Chapter 11 is similar to chapter 13 except it's applicable to businesses. For the best information on dischargeable debts that are specific to your situation and the type of bankruptcy you should file, you should contact a bankruptcy attorney. 

Professionals, like those at the Law Office of Barbara B. Braziel, realize that The Bankruptcy Reform Law of 2005 tightened the filing eligibility by establishing a means test for filing bankruptcy. 

As a result, fewer people are now eligible to file for bankruptcy. Your income must be less than the median for your state in order to file. If it exceeds the median for your state and you have money to pay some of your bills, you are ineligible to file.

Determine if Bankruptcy is the Solution

If you're eligible to file, you might consider a few more criteria to determine if this is indeed the best solution for you. Bankruptcy has long-lasting ramifications, so it should be the last option rather than the first one. 



You'll be required to obtain financial counseling and the negative impact will be on your credit report for at least 10 years. You must be comfortable with the concept of walking away from legitimate debts and realize that you may feel guilty for doing so.

Consider Other Options

There may be options other than bankruptcy that would work for you. Instead of filing for chapter 7, you may be able to file chapter 13 and pay off most of your creditors. 

This would be significantly less detrimental to your credit score. If you can foresee an improvement in your financial situation in the near future, you might want to delay filing bankruptcy.

Make Permanent Changes

Often, filing bankruptcy is only a temporary solution because an individual's poor financial habits don't change. 

If you decide to file, you should seek credit counseling so that you don't end up in the same financial quagmire in the future. Making positive changes to your financial attitude is the best solution to avoiding bankruptcy.

Sometimes, situations occur that necessitate filing for bankruptcy. Often, it's circumstances over which you have no control, such as a catastrophic illness or accident. 

If filing for bankruptcy is the best solution for you, then by all means avail yourself of it, but realize that it's a temporary solution and do your best to change your future financial habits.

I Declare! A Short Explanation Of The 2 Chapters Of Bankruptcy

If you’ve been struggling with debt, your best option may be filing for bankruptcy. There are several different bankruptcy options available, and each option falls into the liquidation or reorganization category. 

Most consumers file either a Chapter 7 or a Chapter 13 bankruptcy. Here’s what you need to know about the two most common bankruptcy chapters.

Liquidation with Chapter 7 Bankruptcy

With a Chapter 7 bankruptcy, the trustee of the bankruptcy can take and sell some of your property and put that money towards paying down your debt, hence why it’s known as a liquidation bankruptcy. 

The good news is that many types of property are exempt from this liquidation. What you can keep will depend on both state and federal law.




When you file for Chapter 7 bankruptcy, the majority of your unsecured debt and potentially even all of it will be wiped away. 

Unsecured debt is debt that has no property attached as collateral, such as a hospital bill. There are certain debts that bankruptcy can’t erase, such as tax debts and student loan debt.

For your secured debt which has property attached as collateral, you have a couple options. 

You can let the lender take that property to settle the debt, you can pay the lender the property’s current replacement value or you can set up a payment plan with the lender.

Chapter 7 bankruptcy is usually a three-to-six-month process, but you can’t file for it if your income is high enough for a Chapter 13 bankruptcy.

Reorganization with a Chapter 13 Bankruptcy

When you file for Chapter 13 bankruptcy, you make a proposal regarding how you can repay your debts over the course of three to five years. Your financial situation will determine how much of your total debt that you need to repay. 

You keep all your property this way, and if you’ve missed payments on a secured debt, you can make those up to prevent the repossession of your property.

Chapter 13 bankruptcy requires that you have stable income and that your income is enough to stick to your proposed payment plan. If you don’t make enough, you’ll need to file Chapter 7 bankruptcy instead.

Both bankruptcy options can help you recover from your debts. You’ll need to consider your current financial situation when deciding which one you should file. If you make enough for a Chapter 13 bankruptcy, that’s the one you’ll need to choose. 

If not, Chapter 7 bankruptcy can also help you. To avoid wasting time filing the wrong type of bankruptcy, it's wise to consult a bankruptcy expert like Demers Gagnier Inc. with any questions you have.

How to Keep Your Sanity while Navigating Through Bankruptcy

Getting stuck in the quicksand of debt and bankruptcy can make your life quite unbearable. Calls and letters from creditors, the possibility of a foreclosure or repossession are immensely stressful and can be quite hard to deal with. There are quite a lot of reasons why you should file for bankruptcy, but we’re sure you can name a number of those against this solution.

In modern world’s economy, bankruptcy is one of the critical stages any kind of business may undergo. When you have to repay your creditors, but you don’t have the resources or you’re unable to do so, bankruptcy may be the only way you can get something out of that situation.

It may be challenging to deal with bankruptcy, and it can be quite stressful, but it’s not impossible. We’ve scoured the web, and we’ve made a list of some great tips that may help you out with stress and anxiety during bankruptcy. 

The important thing to understand is that even if you have filed for bankruptcy, that doesn’t mean you’ll necessarily lose your company. So, without further ado, let’s dive in and learn how to deal with bankruptcy-induced stress.

Understand what’s ahead

The most important thing you should keep in mind is – what lies ahead. The best way to deal with stress and anxiety from a bankruptcy is to really understand what you are going into. 

Different countries and states have different bankruptcy laws and regulations, so make sure you completely understand the process before you file for one. This will help you avoid unexpected problems and quite a lot of stress induced by not knowing what to do next.




You have to start thinking ahead and planning in advance so you can deal with the bankruptcy in a proper way. In order to deal with the deadlines of your debts, you should think about overtime, multiple income streams and cutting down the leisure and luxury expenses from your budget. You will need to learn how to plan ahead in order to reduce the anxiety and stress that follows bankruptcy.

Keep an open mind and ask questions

Various studies have shown that one of the best ways to deal with your problems is to be open about it. If you’re open about what’s happening, you will reduce a great amount of stress that follows these proceedings. 

Quite a lot of people are letting their ego in the way and they choose to keep the fact that they’ve filed for bankruptcy a secret. This can affect their personal relationships in a bad way, and you need to know that bankruptcy is a solution, not a problem. You don’t need to go around yelling it proudly, but keep your close ones in the loop.

If you have any questions – ask them immediately. Ask your lawyer, or your trustee, and make sure you completely understand how things work. If you have any questions about the specific debts and which can be discharged, or you’re wondering why are your creditors still calling you after you’ve filed for bankruptcy – ask those questions right away. 

Get in contact with your lawyer, trustee or a third party. Contact someone you know that went through the similar procedure and get the answers you need. All of this will help you keep a clear head during this period.

Look for financial advice

As financial laws and regulations differ from one country to another, even from state to state, the best way to deal with too much stress and anxiety in these uncomfortable situations is to seek financial advice. There are lots of great free and cheap courses and classes that help you find any alternative to bankruptcy. 

There are some great solutions like Dean Willcocks Creditors voluntary liquidation or any other kind of deal with the creditors, so make sure you know everything before you decide to file for bankruptcy. Having a financial advisor can help you out deal with personal finances during the life after bankruptcy, and they can help you understand the better approach, and reevaluate your own.

Wrapping It Up

So, as you can see, however hard and stressful filing for bankruptcy may seem, it isn’t something you should be ashamed of, and it certainly isn’t something worth your health. This short guide aims to help you understand that there is life after bankruptcy and that life doesn’t have to be stressful and hard. 

It requires some planning and a bit of organizing, but there are countless examples of successful men and women who managed to make a business empire even after they’ve filed for bankruptcy, so, chin up, and start learning.

Bouncing Checks: 4 Ways to Make Bankruptcy Easier to Manage

Bankruptcy can have a profound effect on your finances both now and over the next several years. While it may help you get out of debt, it can also make it harder to get credit for the two to three years that follow. 

The bankruptcy will also stay on your credit report for up to 10 years. What steps can you take to best manage bankruptcy?

Know Your Rights

It is important that you learn as much as possible about your rights as it relates to filing for bankruptcy. During a bankruptcy case, creditors are generally unable to contact you or move forward with a repossession or a foreclosure. 

If you get any demand for payment from a creditor, contact your attorney, the case trustee or the bankruptcy court immediately. Doing so may prevent you from making payments or otherwise enduring harassment that you don't need to go through.

Know What Type of Bankruptcy to File For

Chapter 7 bankruptcy is ideal for those who have unsecured debts and few assets. Chapter 13 bankruptcy is best for those with secured debts or debts that can't be discharged. 

Professionals, like those at Demers Gagnier Inc., may be able to help you understand your options and which type of protection from creditors is right for you.

Know the Requirements before You File

When you file for bankruptcy, you will be required to provide information about your income, assets and liabilities. 

You will also be required to go through credit counseling within 180 days of filing. Taking the process seriously and providing any information asked of you in a timely manner may prevent your case from being dismissed or rejected.

Stick to the Repayment Plan

If you file for reorganization bankruptcy, you will be required to make payments on some or all debts for three to five years. Payments will be made according to a plan that is approved by the bankruptcy court. 

Making your plan payments as required may avoid challenges from creditors or other problems that could result in your case being dismissed. If you have trouble making payments, get in touch with the case trustee as soon as possible.

`Bankruptcy is ideally a last resort for dealing with debt after all other options have been exhausted. However, when done correctly, bankruptcy may help you get a handle on your finances both today and in the long run. 

If you are thinking about filing, make sure to do so with the help of an attorney or financial adviser to make it easier to manage the process.

Understanding Bankruptcy and How it is Not the End

For most people, the decision to file for bankruptcy relief is a difficult one. It is a scary process a nd it can feel like that you are just giving up. 

That you will never be the same again. Well, nothing could be further from the truth. Bankruptcy doesn’t have to be the scary process. While it may be difficult and life changing, it is actually meant to help you start over. 

With that said, bankruptcy is a process that should never be taken lightly and it will likely be a process where you will need help in order to get through it in one piece.

What Bankruptcy is

Bankruptcy is a legal process that allows some people and businesses to repay or completely eliminate debts. It occurs when a person or business cannot repay their creditors. 

While bankruptcy is not usually the first option, for many individuals it is the only one that makes sense. It can help you get your life back on track. Since this is a legal process, you are going to need to hire an attorney with expertise in the field. 

Bankruptcy laws are complex. Do you need to file a Chapter 7 or a Chapter 13? Do you know the difference? A bankruptcy lawyer will work with you through the process. 

In addition to the bankruptcy filing, you should also consult with an attorney like those at the Law Offices of Barbara B. Braziel.

What Bankruptcy is not

The stigma attached to a bankruptcy no longer exists. It is not a sign that you have failed. It does not mean that you have been reckless with your finances. 

It does not mean an end to your dreams of home ownership or new cars. It is a setback. It is a setback that will take some time depending how bad your financial situation is. 

You may not be able to buy that nice house or nice shiny new car when you originally planned on it. You have to postpone those purchases. Bankruptcy is meant to help you start over and reset your finances and for you to get everything in order again.

Is There Life After Bankruptcy?

The answer is a definitive “yes.” You are not the only one to face financial difficulties. It is true that a bankruptcy record will be on your credit file for up to ten years. 

However, most people are surprised to find that even with a history of bankruptcy, lenders are often eager to extend credit. That actually makes good sense. With your bankruptcy, your debt has been eliminated. 

You now have more funds available to make your payments than prior to your bankruptcy. In many ways, you are seen as a better risk than someone with existing debt. Many people who file bankruptcy are surprised to learn that they can often purchase a new car within a short period of time. 

Most mortgage companies are willing to finance a home if you wait at least 24 months after your bankruptcy has been discharged.

Bankruptcy is not the first option for most individuals, but it is the only solution for many. Especially if you have hit some financial hard times or have owned a business that consequently went under. 

The bottom line that everyone needs to understand, is that while bankruptcy may carry that negative connotation, while it may not be as situation anyone wants to be in, it is ultimately there to help you out of the financial hole that you might be in. 

With expert legal help, you can survive a bankruptcy and face a future that is brighter than you may expect.

Bankruptcy: 4 Tips For Overcoming The Worst Of The Worst

Money can indeed bring some degree of euphoria, but it's also a common source of negative emotions, particularly when bankruptcy hits. 

Chapter 7 bankruptcy is the most common case of consumer bankruptcy in the country, during which all of the individual's non-exempt assets are surrendered to and handled by a trustee. 

The trustee then distributes the funds to pay the filer's creditors. Bankruptcy can be a dark time in a person's life, but even then, light can be found. Here are four tips to overcoming the worst of the worst. 

Know the Real Effect of Bankruptcy

Take affluent investors and celebrities, for example. Many of these people have filed bankruptcy at least once in their lifetime and still emerged as victors. 

Bankruptcy tends to have a social stigma whereby the filer is rendered immobile to improve his/her financial circumstance. Acknowledge the fact that bankruptcy does not stop you from creating wealth. 

If anything, the experience should motivate you to be a better steward of your finances.

Don't Rush into Credit Cards

For some folks who've just filed bankruptcy, getting credit again is perceived to be a good solution for making external fixes to their creditworthiness. 

However, experts suggest this is not the best solution to get back up after your financial fall. A bigger and more positive solution is to take a step back and reexamine your financial personality, beliefs, and habits.

Hire Professional Help

Bankruptcy laws and the whole filing process add to the already stressful circumstance a filer is in. 

To avoid such unnecessary complications, getting the help of professional legal services is a wise investment. The guidance of a bankruptcy professional can speed up the process and ensure that no other penalties are incurred due to erroneous filing. 

A bankruptcy lawyer, like Lazaro Carvajal, can speak to you directly and give a more detailed explanation of bankruptcy law.

Start Making Budget Trims

Life after bankruptcy filing doesn't have to be completely back-breaking and stressful. 

With proper planning and working towards small, achievable goals, you can repair your finances and improve it for the long term. 

Start by making trims on unnecessary purchases, such as magazine subscriptions, cigarettes or alcohol, and gourmet-brand food. 

Cut back on these expensive and unnecessary consumption at least until you regain your financial footing.

Overcoming the worst of the worst won't be easy nor will it come quickly. With the four tips above, however, you'll be able to go through the experience with more confidence and direction.

Chapter 13 vs. 7: What You Need to Know About Bankruptcy

Are you facing overwhelming medical bills? Have you acquired more debt than your monthly income can cover? 

When you've done all you can to pay your debts and it's not enough, you may decide to consider filing for bankruptcy. To decide whether filing Chapter 7 or Chapter 13 is better for your particular circumstances, compare these pros and cons.

Chapter 7

If you're willing to give up some of your assets in order to satisfy your creditors, Chapter 7 may be your best option. 

Considered the "liquidation bankruptcy," this filing means you'll relinquish certain possessions such as real estate, vehicles, stock, and other personal property. Chapter 7 is also an option even if you have few or no assets to offer.

The court will sell these assets and use the proceeds to satisfy your creditors. 

The creditors must accept the final settlement they receive and discharge your obligation, even if you have few belongings to sell.

Chapter 7 is not intended to wipe you out by taking everything you own. Instead, it provides a clean slate for starting your life over. 

To this purpose, property which is considered necessary for living is exempt from being sold. This usually includes at least one vehicle, some furniture, equipment you need for work, and perhaps even some equity in your home.

As state laws differ on what may be considered exempt, you may want to contact a lawyer from a firm like Demers Gagnier Inc. to assist you in determining whether your income qualifies for this filing and which properties you may be allowed to retain.

Chapter 13

Chapter 13 is for those seeking to protect their home from foreclosure, or who have a business they don't want to be liquidated. 

It's also ideal for those who desire to pay off their debts rather than have them discharged.

This type of filing consolidates your debts into one affordable monthly payment, typically over a five-year period. 

Once the plan is established, you make payments to an independent agent who disburses the funds to your creditors. These payments can also include a system to help you catch up on your mortgage payments over time.

After You File

Neither Chapter 7 nor Chapter 13 discharges student loans, divorce and child support settlements, or your home mortgage. In addition, expect your bankruptcy to remain on your credit report for seven years. 

Despite these drawbacks, the best benefit of a bankruptcy filing is the relief you get from having a chance to start over.

Five Secrets to Negotiating Lower Payments with Creditors

Debt can pile up quickly and soon get overwhelming to keep up with. If you get buried in debt and can't pay your bills, an option may be to negotiate lower payments with your creditors. That won't always be easy, and you will have to convince those creditors that taking what you can offer is the best deal they will get. However, there are a few ways you can make this process less stressful and more effective. Here are some ideas to get you started on lowering your debt:

Put bankruptcy on the table

Car and home loans are secured by property, and if you can't pay your bills, those lenders will simply seize your collateral. The creditors you will be negotiating with are likely to be unsecured creditors such as credit card companies. Those companies could be left with nothing in a bankruptcy and may be more willing to negotiate to get something rather than nothing. Be sure to talk to financial experts before doing this.
Aim low

Most unsecured creditors will take half or less of what they actually are owed, so you should start low in your negotiations. If you can afford to pay 30 percent, start by offering 10 or 15 percent. The worst thing that can happen is that the creditor says "no." Starting too high may lock you in a position to pay for more than you can handle and leave with feeling like there is no way out. You might be surprised about how low you can go with negotiations.

Use a third party to negotiate on your behalf

Ideally, you would hire a lawyer or another company to negotiate with creditors on your behalf. Such businesses negotiate on your behalf with creditors and can help you get the best of the deal so you can move on from your financial troubles quicker. They know the business more than you do, and they can often get better deals that you wouldn't even come close to on your own. This can help you get back on your feet quicker and not stress as much during the process of becoming debt-free.
Focus on the worst debts

You likely won't be able to negotiate a cut in all your debts, so focus on the ones that will offer you the most relief. Debts with the highest interest rates and those that are the most overdue should be the ones you focus on first. While this is not always true, it is often the best decision to save you more money in the end. Once you have your big debts paid off, you can continue using the same amount of money to pay off smaller debts quicker.

Show evidence you can pay

Creditors will be more likely to consider negotiating with you if there is evidence you will be able to pay the reduced amount. No creditor wants to spend the time and energy negotiating a debt-reduction agreement only to find out the debtor can't pay anyway. Build up the money you need to pay debts and offer to pay your reduced amount on the spot. Creditors may be willing to go lower if they will get the money right away.

Keep in mind that debt reduction and settlement is not a silver bullet. Even if you lower your payments, your credit score will take a big hit and your accounts will be canceled. However, the effort is still worth it if it keeps you out of bankruptcy. If it does come down to bankruptcy, be sure to work with financial experts to help you through the process for the best outcome.


Informational credit to D Thode & Associates.

5 Signs You Need to File for Bankruptcy

Most people see bankruptcy as a bad thing. No one wants to have to file for it unless they absolutely have to. In fact bankruptcy is there to help people and businesses get their finances under control (Source: Abakhan &Associates Inc.). It may not be fun, but sometimes bankruptcy is necessary. There are many signs that you are heading in the direction of bankruptcy. The following are five of the more common signs, but this list if not exhaustive. 

Borrowing to meet expenses

You may be living on credit cards just to buy food and other basic necessities. If not the use of credit cards, you may be taking out payday loans to get you through to the next paycheck. Whatever your particular situation is, part of your economic survival is dependent upon borrowing. This situation will usually get worse, not better, and the total amount you owe will keep growing. 

One or more debts are in collections

Regardless of how many debts you have, if one or more of these debts are currently in collections, then you may need to file for bankruptcy. This debt may be a car loan that is overdue that is putting your car in danger of being repossessed, or you may be receiving phone calls from debt collectors. Debts in collection are a sign you do not have control of your finances.

Behind in your mortgage payments

This is a bad sign. Once you get behind on your mortgage payments, it can easily lead to foreclosure. Home lenders are notorious for adding late fees and penalties to mortgage payments that make catching up difficult. Bankruptcy can often save your home. In some cases when you file for bankruptcy, some late payments or other penalties may be forgiven. However, it most cases the late payments and penalties are put on hold. The creditors will not be able to collect if at all until your state of bankruptcy has been resolved.

Your savings is gone

Hopefully if you manage your finances correctly, you seldom to never have to touch your savings. If you have a savings account and it depleted, this is a warning sign that you may need to file for bankruptcy. In addition, if your retirement accounts have also been cashed in or you are considering cashing them in, you may need to file for bankruptcy. A bankruptcy can protect your retirement accounts.

You can only make the minimum payments on your credit cards

If you have sufficient income to pay the minimums on your debt each month, you may not think you are on the verge of bankruptcy, but the fact is, you are not making any progress in paying down your debt. The slightest disruption in your personal finances can easily tip you over the edge and into a bankruptcy. If you have multiple credit cards, it is a smart idea to narrow it down to one card. This will help you stay away from the temptation of using too much of your credit to the point that you can’t pay it back. However, you don’t want to get rid of all of your credit cards because you want to try to maintain the best line of credit as much as possible.

There is no single sign that indicates you are ready for a bankruptcy. However, if you can recognize the signposts as you travel down the road to a bankruptcy, you may be able to make necessary changes. At the very least, you will be ready to file for bankruptcy at an appropriate time and not undergo needless stress in your life by delaying the inevitable.

Six Alternatives to Filing for Bankruptcy

Filing for bankruptcy is a drastic measure, one which could have an impact on your financial future for decades. For most people, bankruptcy is only used as a final option. Despite this, bankruptcy should not be considered a financial death sentence—on the contrary, declaring bankruptcy often offers a second chance to those who would not otherwise have received one. If you’re considering filing for bankruptcy, it’s possible that there are some other options to pursue before you go forward with a drastic action. Below are six different alternatives you may want to consider before filing for bankruptcy.

1. Use a Credit Counseling Agency

Before declaring bankruptcy, most people try to manage their debt. There are many credit counseling agencies that are, in fact, nonprofit organizations that just want to help. Such an agency can help you negotiate with your creditors and improve your financial situation. It’s always a good idea to seek professional advice for something as important as personal finance, so consider visiting a counselor before deciding on a repayment strategy.

2. Negotiate with Creditors on Your Own

In some cases, you don’t necessarily have to go through a third party to renegotiate your debt. If it looks like you may have no other way to pay off your bills, certain creditors may be willing to alter your payment schedules to give you more leeway. This can be difficult, however, and seeking professional assistance for negotiations is typically the best way to go about approaching creditors.

3. Sell Some of Your Property

If you file for bankruptcy, you may end up losing many of your assets. With this in mind, it may be better for you to sell your property on your own terms. For example, if you have a boat you have not used in many years, selling it to make a large payment on your significant credit card debt may be a good idea. Holding a yard sale and selling off many of the unused items lying around the house is a great way to put some extra money towards your debt payments and get rid of some clutter. 

4. Borrow from People Other than Creditors

While borrowing more money to pay off debt may seem illogical, it may be a good idea in certain cases. For example, you could borrow some money from family or friends. They are likely to be far more lenient than creditors. Just make sure to eventually pay them back to avoid strained relationships.

5. Slash Your Living Expenses

If a lot of your income is going to things other than debt, you can probably make some sacrifices to redirect some of those funds towards paying your debt down. Get rid of all unneeded expenses. It may be tough to only pay for the bare necessities for a while, but it will be worth it in the long run. Some of the most overlooked expenses are recurring automatic payments—cancelling your subscriptions to paid services that withdraw regularly from your bank account can save you hundreds of dollars every year. 

6. Consolidate Your Debt

Debt consolidation means restructuring all your debts into a new payment program. Debt consolidation can make paying bills less stressful and far easier to repay. It will also likely be cheaper than paying all of them off individually.

Though there are some good alternatives to declaring bankruptcy, for some it is the only way to manage their debt. A Mississauga credit counselor from Paddon & Yorke Inc advises those considering bankruptcy to first seek counseling to assess the options available to them. Being deep in debt is a difficult situation, but keep in mind that there are avenues available to help you recover your financial standing.