Let's talk about avoiding bankruptcy and what you can expect in each situation. Some options are more favorable than others and once you have explored all of your options for getting out of your debts, you may find that bankruptcy is your best option.
1. Earn more money
It's obvious in fact. When you are looking to get out of debt and avoid bankruptcy, the best thing to do is to earn more money. I know, it's easier said than done, but have you really explored creative and original solutions to increase your monthly income? Here are some of my suggestions that have helped former clients:
Rent a room to create rental income;
Get a second job
Ask for an increase to your current job;
Put the children to work and if they work, STOP PAYING THEIR FEES;
Organize a garage sale or sell items that you no longer use on Craigslist;
Start a secondary activity by repairing or reusing items for resale
2 Cutting costs
There are only two sides in the budget register; revenues and expenses. Another better strategy is not only to increase your income, but also to reduce your expenses. The money left over can then be used to pay off debts and avoid bankruptcy. Here are some often overlooked ways to reduce your expenses:
Transportation: Reduce transportation costs by taking public transportation to work. You would be surprised to find that your stress will decrease with public transportation. If you plan to drive, make sure your car is well maintained and paid for. Maybe you need to downsize and get yourself a cheaper car that is paid to reduce car payments.
Insurance: The costs of home and auto insurance can be reduced by examining the amount and type of insurance policies written. If your car is older, consider removing any property damage coverage (complete damage / collision) and maintain your liability only. The limits of liability on insurance policies must be sufficient to protect your assets. So, if your car and your home do not have equity, you do not need an upper limit insurance policy. Also, shop for insurance.
Utilities: Turn off lights and air conditioning. Cut that cell phone bill or cut the land line. Call each company to reduce the services that will reduce your bills, or cut them completely.
Grocery: Make coupons only if it makes sense to you by buying your shampoo, soap, toothpaste, dishware and laundry items on coupons. Paper products are another great household item to buy with a coupon. Cut your grocery bill by planning your weekly meals before you shop and consider other meals for which you can use similar ingredients. Cooking at home can not only save you money because it costs less than going to the restaurant, but it can also help you live healthier.
By tightening the budget by increasing revenue and reducing expenses, you will reduce the cost of your debt by taking a long-term lifestyle. Even after maximizing this strategy and applying all your disposable income to the debt, it may not be enough and you still face bankruptcy. However, I still believe that knowing your numbers is an important step in financial transformation and in the elimination of debt, regardless of the direction taken.
3 Debt settlement
If you pay late credit cards, you can negotiate them; sometimes for pennies on the dollar. This may seem like a money saving strategy, but can leave your credit score in shambles. First, you will need a cumbersome savings account to pay a lump sum when settling the debt. Make sure you get a written policy and ask them to remove the business line from your credit report. You can not get credit cleaning, but it's not bad to ask either. This can be an effective method of debt elimination if you only have one or two debts to work with. Not more than that and a bankruptcy case would be a cheaper, better and faster way to get out of several debts at once.
The consequences of debt settlement are that not only will you pay down the debt, but your credit may be negatively impacted.
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