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Ways to Stay Out of Bankruptcy

Jul 19, 2008
Bankruptcy is an undesirable last resort for escaping from serious debt. Before making a rash decision to declare bankruptcy, which will be made a part of your credit history, think about using some other methods to stay out of bankruptcy.

Make a budget. Although making yourself a budget is not the easiest thing to do, it will help you prevent serious debt later on. Start by listing all the bills you need to pay each month, ignoring payments on credit cards and non-essential expenses like dining out and entertainment. Then subtract the total of your bills from your income. The money that remains should be used for savings, eliminating credit card debt, and recreation.

Over the course of three to four months make a record of how much your bills have added up to and from there determine your monthly average for your budget. Utility bills can be made the same each month by applying for an equal payment plan. You will be able to prevent debt from building up and go out and enjoy yourself from time to time by being disciplined and sticking to a well arranged budget.

When you get behind on a payment, call the credit card company. Everyone hits a road bump. A layoff or an illness can send things spiraling out of control with your finances. Let credit card companies know that you are in a bind at the moment. They may suggest ways to lower the payments or suspend them for a month or two until you are in better financial shape.

Fortunately, credit card companies do not hand over delinquent accounts to debt collection agencies right away. Before you have missed too many payments, call the credit card company yourself instead of waiting for them to contact you. After becoming aware of your circumstances, they could choose to cancel late fees that have been charged on your account.

Get advice on debt consolidation. Check out any one of the many debt consolidation services that are interested in getting your business. There you will be able to speak with certified professionals whose advice could help you to avoid bankruptcy. They are very familiar with creditors and the ins and outs of debt. The small fee they charge could be well worth it.

Liquidate assets. You may have two cars, but can you make due with one for now? Selling property can free up the cash you need to pay off major debts. With a smaller debt, you may be able to talk to creditors and make payment arrangements. Move into a smaller house if the kids have moved out. Anything is a better alternative than bankruptcy.

Since it deals great damage to your credit, bankruptcy should be avoided if at all possible. Do what you can to control debt and prevent bankruptcy while you still can.
About the Author
Do you realize you can save a lot of money on interest by negotiating credit card debt? Find out how you can get a lower interest rate, and save money at the same time on the Debtopedia website. Visit http://www.debtopedia.com for more helpful information and to receive a free copy of my special report The Secrets Of Credit Card Debt.
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