In a world filled with unstable economies and various business set-ups, the word ‘bankruptcy’ gets thrown around a lot.
Bankruptcy is a legal term used to describe the situation of an individual or a business entity when he/she is unable to fulfill financial obligations. It mostly involves the seizing of the debtor’s assets and settling of the creditors.
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What Are the Alternatives to Declaring Bankruptcy?
However, bankruptcy might not be your only option. Here are five alternatives to filing for bankruptcy:
- Getting Another Source of Income:
Get a better-paying job, a lucrative side hustle, or change your company’s strategy. These would help greatly with the payment of loans. You can drive Uber or settle for freelance jobs which are available online with few requirements. By the way, get here for an answer to the question “which chapter of bankruptcy should I file?”
- Sale of Assets:
This is often the go-to. There is a huge probability that you’ve thought of this before the thought of declaring bankruptcy came up. You’ve probably looked long and hard at your car or whatever prized possession you have and thought: I best sell this to settle my debt. Yes, you probably could. Selling a few personal possessions could help a great deal in settling debts and avoiding the Federal Court’s involvement.
On this issue, I say pick wisely. There are items that could drastically affect your business and its operation.
- Borrow from family or friends:
While declaring bankruptcy might be the last resort for some, it could well be the best option for others. However, it has the huge disadvantage of making you unqualified for other loans in the coming years. No one who runs a company would want to give you a loan with your current credit score EXCEPT family and friends. These are people who would more likely take your word for what it’s worth and oftentimes, the payback periods are more flexible.
- Lifestyle Changes:
Some people go as far as saying you should bury your credit card since it was the very thing that got you into this mess. No, don’t. It isn’t that deep. What you need is a lifestyle change. Sit, look around you, and list out your most expensive expenditures. After that, go after the unnecessary expenditures as well. Cut parts of these two expenditures and you’ll find that you are not really suffering and can still function. This way, you have more money to pay off your debts gradually.
- Settling Debts:
There would be some creditors you can talk into taking installments and others with whom you might get so lucky as to get a clean slate. You can either do this yourself; use a debt settlement company or non-profit firms that help with credit counseling.
Note that companies that help settle debts do not collect fees until some work has been ongoing and some progress made.
You’ve come this far and I hope you have realized that there are still ways to go about settling your personal or company debts without having to file for bankruptcy. Most of all, they would probably cost you a lot less than filing for bankruptcy.
