Let’s discuss how to avoid bankruptcy and what you can expect in each case. There are many options available, and you might find that bankruptcy is the best option for you.
This is an easy decision. If you want to avoid bankruptcy and get out of debt, it’s best to make more money. It’s not easy, I know. But have you ever thought of creative ways to increase your monthly income? These are some of the suggestions I have given to past clients.
To create rental income, rent a room.
Do you want to get a second job?
Ask for a raise in your current job.
Get the kids to work, and if they aren’t working, stop paying their expenses.
You can have a yard sale or sell the items that you don’t use on Craigslist.
You can start a side-business repairing or repurposing items to resale.
The budget ledger has only two sides: income and expenses. A second strategy is to increase your income and cut down on expenses. The money you have left can be used to pay off debts or avoid bankruptcy. These are some of the most overlooked ways to reduce expenses.
Transport: Take public transport to work to cut down on transportation costs. It will surprise you to see how much stress public transportation can reduce. Make sure you have your car insured and maintained if you intend to drive. Perhaps you should downsize to save money on car payments.
Insurance: You can reduce your auto and home insurance costs by reviewing the type and amount of insurance policies that you have. Consider removing any collision/comprehensive coverage for older cars and focusing on liability. Your assets will be protected by the liability limits of your insurance policies. If your home and car have no equity, you don’t require a high-limit insurance policy. You should also shop around for insurance.
Utilities: Turn off lights and air conditioners. Reduce your cell phone bill or the landline. Contact each company to find out if they can reduce or eliminate your bill.
Groceries: Only use coupons where you can. This means that you won’t have to coupon for shampoo, soap, toothpaste or dishwashing detergent. Coupons are also great for household items like paper products. Plan your week before you go shopping. Also, consider other recipes that can be made with similar ingredients. Not only is it cheaper than eating out, but cooking at home can help you live a healthier lifestyle.
It’s not a lifestyle decision to tighten your budget by increasing income or reducing expenses. However, it can take more than five years to repay all of your debts. You may find yourself in bankruptcy even if you maximize this strategy and apply all of your income towards debt. Regardless of the direction you go, knowing your numbers is an important step towards financial transformation and eliminating all debt.
You can negotiate credit card payments if you are behind in your payments, sometimes for pennies per dollar. Although this may seem like a great way to save money, it can also cause credit scores to plummet. To settle your debt, you will need to have a large savings account. Make sure you get the settlement in writing. Ask them to remove that trade line from credit reports. Although you may not be able to get credit clean up, it is worth asking. If you have only one or two debts, this can be a good way to eliminate them. If you have more than this, a bankruptcy case is a better and faster way to get rid of multiple debts all at once.