Bankruptcy is a drastic step to take, but there are some less-strenuous options that can help you avoid filing for bankruptcy altogether.
Start by making a budget and putting together a plan for reducing your expenses. This will help you cut down on things like eating out, gym memberships, cable, subscriptions and other extraneous spending that can drain your finances.
Cut Your Expenses
One of the most important things you can do to avoid bankruptcy is cut your expenses. This might mean selling some extra items or getting rid of subscriptions for services you don’t use.
Go through your budget and list all your spending. Compare this to your income.
You might find that your monthly expenses are higher than what you make. This is a sign that you have too much debt.
Try to reduce your expenses and stick with a strict budget. This might involve cutting your cable TV, dropping your gym membership, skipping takeout food and putting yourself on a shopping freeze.
Find a Second Job
Having an extra source of income can help you get out of debt faster. It also helps to keep your credit rating strong.
If you’re unsure whether or not getting a second job is right for you, talk to your Houston bankruptcy lawyer about it. He or she will likely advise against it if your current finances are in bad shape, but if you have enough spare cash to cover your bills and save for a goal that will benefit your family in the long run, then it may be a good idea to look for another job.
It’s important to find a second job that doesn’t require you to be in the same place for long periods of time. This can prevent you from getting bored or developing repetitive stress injuries from working too many hours each week.
Borrow from Family or Friends
Borrowing from family or friends can be a great way to avoid bankruptcy. However, it can also be a double-edged sword.
Almost half of the people who took out loans from family and friends in the past did not receive the money they expected. This caused them to lose money or suffer damaged relationships, according to a BankRate survey.
But if you’re going to borrow from a friend or family member, you need to treat it like you would a loan from a bank. That means making payments every month on time and keeping track of your repayments so you don’t get into trouble.
Having a good relationship with your lender is important, so make sure you’re on the same page about the loan terms and how much you can afford to pay back each month. If you’re not, it may be best to find a different lender or consolidate your debts. This will save you on interest and eliminate multiple payments each month.
Consolidate Your Debts
If you have several debts with high interest rates, consolidating them can be an effective financial strategy. This allows you to pay off one loan with a lower interest rate and make monthly payments that are more manageable.
Consolidating your debts can also help you avoid bankruptcy, which is a costly and painful option. Bankruptcy damages your credit report for years and can make it difficult to get new credit.
Another option is to work with a credit counselor who can help you consolidate your debts. These professionals can help you create a budget and suggest ways to reduce your expenses.
Debt consolidation is a good way to avoid bankruptcy, but it is not for everyone. It is best used as a tool to eliminate debts that have accumulated due to a specific event or a lack of financial discipline. In Harrisburg, PA a bankruptcy attorney can help you with the legal matters of bankruptcy and may have great insight on how to avoid it altogether.
