Debt is primarily a way of living for most people out there. But, sometimes it can turn out to be way too overwhelming and can grasp the entire life of people even before they can realize it. To help save people a bit, bankruptcy law in India is here to stay.
But, it is always a good choice to avoid falling for such bankruptcy law on the first place. There are some valuable tips available, which can help you to avoid bankruptcy on the first place. For that, these seven tips will work well for you.
How To Avoid Bankruptcy
1. Try selling some of your assets if you need to
You can try selling whatever you can actually spare and then use that same money to pay off the debts you are in. If you are lucky enough to pay debt on time then there is no question of being bankrupt at all. It is mandatory for you to take actions immediately, especially when you notice that making payments seems to be a crucial choice for you to make. If you are behind on payments, then it might be too late to catch up.
2. Paying your way just out of debt
Do you have the liberty to pay your debt off over a certain time? There are times when you might think of applying for bankruptcy as you cannot make any more payments. Try to avoid falling into that space on the first place. You can do that by just paying off the debt right on time and get things right. Before taking a loan or money from anyone, think about the amount and how you are going to pay for it beforehand. It will help you to pay off your debt on time.
3. Previous calculation is another point to consider
You have to calculate the money you are planning to borrow first to avoid bankruptcy in the best possible manner. When you are taking loan, you have to think about the interest rate you need to pay. So, to keep bankruptcy at bay, you can actually calculate the price of the loan first along with the interest rate to come to a final conclusion. You might even have to add the penalty charges to it just to be on the safer side. Are you able to pay that sum within the tentative date? If so, then you can easily get rid of bankruptcy by not even falling for it.
4. Ask creditors for some help
Even though it is a bit tough to address, but sometimes you might have to ask creditors to help you in avoiding bankruptcy. You have to pay the loan back to your creditors. So, if you have a good relationship with the creditors, you can ask them to spare some bucks if you find it hard to repay the loan once taken. If the person is kind enough then he or she might spare some bucks, which can eventually save you from falling into the grasp of bankruptcy.
5. Lower down your expenses
It is time to slash your expenses if you are planning to avoid bankruptcy as that will work out well for you. Always remember that you have some debt to pay. So, if you can keep your other expenses at lower rates and only spend for the services or essentials that you need, then you will have enough money to spare and get the debt covered on time. There are some serious sacrifices that you have to make and those are mainly the unnecessary ones. Try to keep the notes of insolvency and bankruptcy law in mind as well.
6. Have to prioritize your debts
If you have taken up more than one loan, then you need to prioritize your debt to avoid bankruptcy. For example, you have to first check out the tenure period of the loan repayment plans. Always try to cover the loan plans with lower tenure first as chances are high that you might have to pay extra for that. If you fail to repay the loan, you are actually inviting more penalties in the loan. On the other hand, you have to collect all the loan debts you have and then divide your salary accordingly so that you can pay a selected sum for all debts you have on a monthly basis. You have to follow this section more diligently and get response as asked for.
7. You have to start using credit reports
Credit reports, on your own and even on those of customers, will play the role of a vital tool for the success of your business. So you should start by just studying yours for determining where your current standing is. There are some potential lenders and customers as well, who will look and want to impress them with what you get to see. Credit report seems to be quite essential when you are actually boarding in a new customer. If the report of that person raises red flags, then you are saving yourself from one major headache by extending little room for error.
Apart from these 6 points, there are so many other valuable tips for avoiding bankruptcy in India. Make sure to follow these points now and you won’t face heading towards the jungle of bankruptcy in the first place, to say the least. If you don’t get into bankruptcy, then you are up with higher credit score now.
Amy Jones has been serving as an experienced legal content writer in Ahlawat & Associates, who is related to general counsel attorney. She is a passionate writer and always on the lookout for opportunities for sharing her knowledge with legal community. Follow her company on various social media networks like: Twitter, Facebook and LinkedIn.