In the present volatile financial environment where the value of money, its availability in the market, and rates of interest all are so highly fluctuating, and creditors are reluctant to lend to insecure or unsafe individuals , it is advisable to prevent bankruptcy proceedings, if one really can.
Now we all know that a bankruptcy proceeding under law helps discharge previous financial liabilities and permits a fresh financial start. This brings with it negative credit reports, reluctant landlords, lenders, employers and a host of un-willing suitors to your life. Do you really want to undergo years of social persecution until you regain credit worthiness? Some thoughts that may be helpful in this regard are...
Diligent and prudent financial conduct - Yes, you are probably thinking if I was diligent and prudent already, why I would be reading this article! Nevertheless, for those that are not close to a bankruptcy proceeding, this will certainly be helpful, and for those undergoing it, surely it helps to be diligent post discharge of debts. So, make sure your spending does not exceed your current earning potential. Gradually increase your commitments and that too only for those that provide financial security in old age or those that are incremental investments. It is quite alright to not succumb to fire sales at the local malls. Most importantly, as an individual, pay your bills on time and ensure none get left out, and see that all your checks get honored for payment at your bank.
If you anticipate a financial downturn, job loss, or a reduction in earning potential, immediately engage in discussions with your lenders, bankers and credit agencies to work out alternate methods for repayment. Consolidate your debts; opt for transferring your debit balances to lesser credit cards and loans that carry lower rates of interest.
Additional measures - Relocate to a residence with a lower rent or mortgage requirement; move children to less expensive schools. Cancel holidays and instead take a full day out with family to the local picnic spot, park or mall.
If your are employed full-time, talk to your employer about additional tasks or instead to allow you to work part-time to generate additional income.
Savings - At all times of your earning life, put away anything between ten to thirty percent of your earnings in remunerative savings. Some of these should be in government and sovereign guaranteed bonds and investment schemes. While they deliver lower interest rates, in an economic slowdown at least your principal investments are safe and they return with the guaranteed interest amount.
Opt for traditional savings options that have been realizing steady growth such as land, real property and precious metals like gold and silver.
Any stark or difficult measure is advisable over filing for bankruptcy, which could mar your credit worthiness for a long period of time. Act prudently and save yourself from future embarrassments.