I am Trying to Avoid Bankruptcy – What should I do?

avoiding bankruptcy

I want to avoid bankruptcy – how?

Bankruptcy talks always give business men a chill; it’s like reaching the end of the road and you are required to jump off a cliff. If there are other alternatives, it’s natural for business owners to take one of those instead of filing for bankruptcy.

The reasons are apparent; bankruptcy leaves a bad mark on your credit rating, not mentioning the loss of assets linked to overdue credits. Re-starting after a bankruptcy also requires you do extra works.

Indeed, it’s possible to open a business after bankruptcy, but you need to change your mindset and the ways you do business, so bankruptcy in the future can be avoided at all cost. Furthermore, as bankruptcy is recorded in your credit history, getting loans is trivial; you need to contact your local small business administration to help you back your loan requests; otherwise, start afresh with no loans.

How to avoid bankruptcy?

There are some ways for you to avoid bankruptcy:

Ask your creditors for help

Logically, it’s better for a creditor to get a part of his loan repaid than not getting anything at all. With that premise, you could let your creditor know about your situation and ask a relief by, for instance, lowering the monthly payments, lengthening the loan period and/or lowering interest rates.

If you are a UK resident, you might have already heard about IVA and CVA. In plain English, IVA (Individual Voluntary Agreement) is a contractual agreement between an individual (including self-employed) and his/her creditors in arranging payments of your loans and it can be as flexible as your very own circumstances. IVA is a formal way to avoid bankruptcy, as it offers some benefits that might interest you.

One of them is in giving you “second wind” – unlike bankruptcy, an IVA allows you to obtain credits, as well as allowing you to do business, as usual. Maybe the biggest advantage of IVA is the fact that you still have some controls over your assets; an IVA might exclude your property entirely, proposing re-mortgage or other viable methods.

CVA is very similar to IVA, except the fact that CVA (Company Voluntary Agreement) involves a company, not an individual or self-employed.

Sell your assets

It’s not for everybody, but selling your assets and pay off your debts can offer you a quick relief of your debt problems. Furthermore, selling your assets prior to your debt repayment due date keeps your credit rating intact. It’s better to settle things once and for all, and re-start with nothing dragging your feet.

Ask for professional help

If everything is too much to handle yourself, you can always seek professional help to take care of everything on your behalf in exchange for a fee. Be aware, though, debt settlement or consolidation company charges a fee that can be considerable compared to your total debt amount.

Good luck in your journey avoiding bankruptcy!

Ivan Widjaya
On avoiding bankruptcy

About author

Ivan Widjaya
Ivan Widjaya 1878 posts

Ivan Widjaya is the Owner/Editor of He is a web property investor, blogger and web property builder.

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  • Carl,

    That’s a great tip – we are often overwhelmed by the possibilities ahead and get discouraged before we even try anything. Indeed, bankruptcy can be avoided with hard work and following the right advice.


  • Bankruptcy is not the only solution – take a few weeks and digg hard and fast into your expenses and income to see where your spending leaks are – this takes commitment and hard work but it is worth the effort. What you find may very well surprise you.