For many consumers, debt is a way of life. In fact, the average American has $38,000 of it.
Credit cards, student loans, and car notes—the weight of debt can make you feel like bankruptcy is the only way out. But you don’t have to succumb to liquidation. There’s a way to circumvent it.
Bankruptcy devastates your credit score and impedes your financial progress for years. Steer clear of shady business amateurs who advise of it as an immediate option. Once they get paid to file your paperwork, you’re left alone to rebuild your life again.
Before you file bankruptcy, familiarize yourself with other options. Discover these five amazing tips on how to avoid bankruptcy now.
1. Commence Financial Dieting
The first step to resolving your debt is changing the way you spend. People fall into debt because they expend finances without a budget.
Frivolous spending is the quickest and easiest way to fall into debt. Start a financial diet right away.
Phase one in avoiding bankruptcy begins you get a grip on your spending habits and establish a budget. Pay what you owe first, then ration from there. Necessities like the mortgage, utilities, and credit card bills should receive payment first.
Cable, shopping, and eating out are all complementaries. Let them go. Do your hair at home for a while and pack a lunch for work.
Always place a percentage of your check in savings for unexpected emergencies.
2. Pay Your Way Out
This option may seem confusing at first, seeing you’re already drowning in debt. But it’s possible.
Negotiation is key.
Most creditors don’t want the extra hassle of collection efforts. It costs them more to collect from you than to negotiate the debt. Make a list of everyone you owe, then start making settlement calls.
Pay off smaller debts first. Those $15 minimum payments don’t put a dent in anything. Break debts under $500 into two to three payments and get out from under them. You could pay those off within six months to a year, depending on your salary.
Larger debts take a bit more finagling. But there’s hope. Ask to have your account placed on hold. This keeps you from spending available credit and interest from accruing on the new principal.
Some credit companies offer a break on finance charges if you pay off the principal balance fast. Negotiate a reasonable payoff date. It’ll surprise you how quick you could pay down a large balance.
3. Have an Asset Sale
Closets, attics, and garages stay filled with ill-considered buys that no one ever uses. Get rid of the excess for your benefit.
Have an asset sale.
Asset sale does not mean yard sale. Set up an account on Craigslist and eBay and make some real money off your things. Furniture, clothes, jewelry, electronics and more are hot items that go for a lot online.
Facebook also has a marketplace. Login into your profile, go to the marketplace and try selling something. It’s that simple.
Take the proceeds from your sales and pay off your debts.
4. Ask Family and Friends for Help
Indebtedness takes a psychological toll on you. Pride does as well. Lay it aside and ask for help.
Family and friends are interest-free ways to get financial assistance for overwhelming debt. Setup a payoff plan and schedule. Start adhering to it, then approach those close to you for support.
People like to know you’re helping yourself before they help you.
Ask for a reasonable amount. Present a repayment schedule. And use trusted apps like Cash App, PayPal, and Venmo to pay them back. These apps send instant cash so people don’t have to wait on a check in the mail.
Leaning on those you love is far less stressful and requires less paperwork.
5. Seek Professional Advise
Turning to an expert for help is a smart idea when you’re in financial trouble. If your finances are beyond your reach, consult with a professional.
Debt consolidation is a professional option outside of Chapter 7 and 13. These types of companies give you expert advice and hold your hand through the process. Consolidation specialists organize your debts and make those dreaded calls to creditors for you.
Take a look into Adamson & Associates for more advice on the subject.
How to Avoid Bankruptcy
Our finances get ahead of us when we don’t take control of our spending habits. But all is not lost if you’ve driven yourself to indebtedness. You have a way out.
These tips on how to avoid bankruptcy are not all-inclusive. But they are smart ways to jump-start a plan to get out of debt and keep from losing everything.
Take a look at our business articles for more insight into securing your future.