Bankruptcy is an extreme move when an individual or an organization is incapable of paying their debts. In case of a legal bankruptcy the creditors are allowed to seize the assets of the debtor, who could not pay his debts. There are around 2 million bankruptcy filings every year within US only.
Filing bankruptcy means starting from scratch and all your credit backgrounds become nil. In this situation it will be impossible to get loan or any kind of credit for a long term purpose.
No one knows what future holds for us but all we can do is make good decisions to secure our future financially best possible and be prepared for the worst situation like filing bankruptcy.
It is important to build assets other than having liquid cash in your bank accounts. Gold investment is considered to be the safest investment against economic, political or any other form of crises.
Real estate investment is another option to have stable form of investment. It’s also important that you buy property with some potential for growth in future and in long term form of investment it pays really well.
If you are a stock market player then you should also consider investing in mutual funds. The returns are not as good as the equity funds but it is far safer investment then equity investment.
Organize your Debts
The only way to get rid of creditors is by paying off your debts. You can establish a debt settlement program with your creditors and they may be able to wipe off some percentage of your total amount.
Avoid taking more debts just for the sake of clearing your present debts.
Don’t spend everything you earn, try to save at least 20% of your income every month.
It’s also easy to get a credit card but you are the one who has to pay the debt in the end, by the time you realize your credit card spending goes way over your earnings. The best way to avoid this kind of situation is by paying your purchases in cash or by debit card. This will also ensure that you are aware of all your expenses and bank balance.
Eliminate non-basic expenses such as:
- Regular visit to spa
- Dining at expensive restaurant/Hotel
- Luxury Gym/Sports club membership
Take professional help
Professional financial counseling services can help you in managing and clearing your debts. You can also take help from wealth management services to seek new areas for investment, so that your money grows instead of being just stashed in bank account.