How to Bounce Back from the Brink of Bankruptcy
Bankruptcy can be defined as the legal status of a person or other entity which cannot repay the debts. Bankruptcy is imposed by the debtor in some jurisdiction.
As an entrepreneur if you hit rock bottom, it will become a tough challenge for you to back up again. Your self belief will be shattered when there is nothing left in your bank account. Bankruptcy is not an ideal solution. It causes various serious downsides such as loss of property, debts and your bills don’t go away and your outstanding debts still transfer to others. Once you have bankruptcy, it is very difficult to back up again. Keeping in mind these we need to be very careful in handling finance.
It is very difficult to get credit after bankruptcy. Even if you get you need to pay higher interest. As we know prevention is better than cure we need to maintain our finance in such a way that this situation doesn’t arises. We need to follow some guidelines to avoid this problem such as:
1. Preparing the Budget:
This is the best way to get rid of Bankruptcy. We need to make budget for every month. We need to track our expenses for last three months and based on that we can create a realistic budget. We can save only when we set boundaries on our spending. Making budget helps you to understand the underlying extra cost which you can cut down next time. Preparing budget helps you to make you financially discipline. We should spend as per our earning. We should not spend more than we earn. Preparing monthly budget helps you to manage all your expenses as per your income and helps you in saving.
2. Try to learn to love your cash:
If you learn to love your cash, you will spend it on unnecessary things which in turn will help you to save. If we love something, we handle it very carefully. So, try to love your cash. You should make use of it but we should not misuse it.
3. Pay your Bills on Time:
Try to pay your bills on time. If you have loan and if you don’t pay on time they will charge you additional fees. Paying bills on time will not create this situation. Even it helps you to build relationship for your future credit.
4. Try to avoid overextending your Credit Card:
This is also one of the best options from the brink of bankruptcy. It helps you to help yourself. It is necessary to have credit cards but we should not have money, otherwise it will all mesh up. We need to make use of credit card whenever necessary. But we always are careful of overextending of our credit card. Credit card should be used when you the money to pay it back.
5. Re-establish Credit Through on Line:
Get the help from your bank personal to re-establish credit through online which can be secured by a saving account. It is also known as Secured loan .With the help of this you can pay interest online which might outweigh the interest on your savings.
6. Have a talk with your creditors:
It is always good to have a discussion with your creditors. Discussion helps to bring a solution. Sometimes, it happens that if you have a talk with your creditors, they might help you to resort to filing bankruptcy. They might reduce the interest rate, wave fees and even might reduce the amount f debt you owe them.
Bankruptcy can ruin an individual or an organization. Hence, it is necessary to take the mater seriously so that this type of situation never arises.