Bankruptcy can be extremely stressful, both emotionally and financially, but it doesn’t always have to be that way according to a bankruptcy lawyer residents trust from our friends at The Law Offices of Neil Crane. There are many ways to avoid bankruptcy, and if you find yourself facing tough financial times it’s important to understand them as soon as possible so you can start taking action immediately. That way, if you do get caught in the web of debt and foreclosures, you have time to take action before it’s too late.
1) Create a Budget
One of the best ways to avoid bankruptcy is to create a budget that you stick to. It can be a little overwhelming at first because it requires knowledge about your income and expenses, but it will provide you with a road map for what to cut back on and where to save. No matter how much money you have, creating a budget will help you stay on track so that one day you’ll be able to look back at all of your hard work and know that it was worth it.
2) Stop Using Credit Cards
It’s a common misconception that you can’t declare bankruptcy if you have credit card debt. This is not true. In fact, credit card debt is one of the main reasons people file for bankruptcy. To avoid going bankrupt due to credit card debt, stop using your cards and avoid running up more charges. This can be tricky with automatic charges and with more companies pushing towards using credit cards versus physical cash. In this case, set calendar reminders to check your cards on a regular basis and pay off any outstanding balances.
3) Start Saving Money
It’s a good idea to start saving money and make a plan to avoid bankruptcy. This includes the following: saving money, getting a budget, not spending more than you earn, creating a savings plan that helps you save for emergencies, and learning how to manage your money. It’s easy to say you will save money, but it’s another thing to actually do it. If you are worried about bankruptcy, it’s time to create a plan to save your money.
4) Consolidate Your Debt
Consolidating your debt will involve combining all of your debts into one new loan with a lower interest rate. This is great because it’ll cut down on the number of payments you have to make, which can really help if you’re living paycheck-to-paycheck. It’s also a good idea to pay off any high-interest rate credit cards or loans that are in default before consolidating them with a new loan. If there’s not enough room in your budget for paying off these types of bills before consolidation, consider using cash advances from the card issuer to pay them off. These cash advances usually carry an annual percentage rate (APR) that’s much higher than the APR on balances transferred from other sources, so be sure to factor this in when considering whether it makes sense for you to take out a cash advance and use it towards paying off high-interest debt before borrowing again.
5) Seek Help from a Bankruptcy Attorney
Now that you know the five ways to avoid bankruptcy, it’s time to implement them. If you find that bankruptcy is inevitable, then you should contact a bankruptcy lawyer immediately for help.