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Best Way to Avoid a Bankruptcy

Bankruptcy is something that no one wants to go through. It can put a bad stain on your credit report that usually remains for seven to 10 years, which would hurt your chances for obtaining credit for future items, such as a house or car. Now, just because you have financial difficulties does not mean that bankruptcy is your only option. There are several ways to get out of the financial bondage that you're in.

The first step to getting your finances in order is to make a budget and see on paper how much money is coming in and how much money is going out. Making a budget may sound simple, but it really is the best way to see where you stand financially. Some people do not realize where their money is really going. I personally did a budget for my family and realized that I spent a lot of money on eating out at restaurants. So, by cooking more meals at home, I was able to save a few hundred dollars a month, which was applied to pay down my debt. So, people need to make a written budget so they can see if they need to cut back on any unnecessary and wasteful spending.

The next step is to make a list of all your creditors and call them to see what type of payment plan can be worked out to reduce your debt. Many people avoid their creditors, but if you want to quickly get fiscally fit you need to call them. Do not delay taking care of your obligations, because they will not go away. Your problems will only get worse. Many creditors will be glad to help you come up with a solution to paying them back.

Another overlooked option is to sell some unwanted or unneeded items. Make an inventory of all of your assets and see if you have anything of value that can be sold quickly. Most people have household items, jewelry, guns, and many other items that can be sold to raise extra money. If you need to obtain cash quickly, you can sell on eBay or other similar sites.

Finally, you may not be able to significantly reduce your debt enough to get out of the financial bind that you're in. So, the only solution may be to increase your income by getting a second job. Some people dread having to think about working more hours, but it may be your only choice. You could apply some or all of your earnings to your debt.

Filing for bankruptcy should be the last resort for your financial troubles, because there are many other alternatives to getting out of debt. Getting fiscally fit is not easy, but it can be done by following these simple steps that will keep you from further damaging your credit by filing bankruptcy.