Checklist of Avoiding Bankruptcy

Some things to look at as an alternative to bankruptcy include the following:

  1. Selling off assets. If your financial circumstances have become difficult, it may be the time to sell of assets to pay your debts.

  2. Reduce all costs. If things are starting to look precarious, then be realistic. See what you can do to reduce all expenditure and get all non-essential costs out of the way.

  3. Budgeting. Budgeting means sitting down with an adviser, such as an accountant, and working out a plan to enable you to live and progressively pay off all debts.

  4. Refinancing. You may like to look at refinancing some assets and using the surplus cash to pay off creditors who can cause problems by lodging a creditor’s petition for bankruptcy if they are not happy.

  5. Creditor’s pool. You can always try and arrange with your creditors to clear up their debts by instalment payments. You will pay a certain amount of money into the pool and that money can be distributed to the creditors until their debts are paid.
  6. Compromise. You can reach an agreement with your creditors on a proposition where their debts can be fully settled. There are a number of ways to agree on a compromise with creditors.

  7. Court Order. This is an order made by a court allowing you to pay back debts in easy stages without the threat of further legal action, while the order is in force. This is a good option if available. 

  8. Continue trading. If your business is temporarily insolvent then you should look at ways where it can still continue trading and hopefully generate good cash flow to meet your commitments. If you can, it is good to trade your way out of your financial difficulties.

  9. Bankruptcy. If you have tried all other actions and they have not been successful or agreed to by your creditors, then consider filing for voluntary bankruptcy in order to stop deterioration of the situation.

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