5 Smart Ways to Avoid Bankruptcy
While some people find themselves buried in debt because of poor financial decisions, others may face a stressful financial situation because of unfortunate and unexpected events in their lives. Regardless of why you have reached this dire situation with your finances, you understandably want to find a way to get caught up, to pay off your debts and to avoid bankruptcy. Each person has a unique situation to consider, but these are some of the more helpful steps that may be applicable for many people.
Adjust Your Budget
If you are underwater with high debt balances that you cannot seem to wrangle down, there is a good chance that you are currently living beyond your means. First, you need to adjust your budget so that you are living within your means comfortably. Then, you need to make additional cuts to free up money that can be used for debt reduction. This may include taking drastic steps, such as going down to a single car for your household, canceling cable and video streaming services, and more.
Get A Second Job
After you have scaled back your spending substantially, take the additional step to bring extra money in. You can get a second job, such as driving for a rideshare service or working at a local retail store. You can also consider finding a roommate to bring extra money. Some people may be able to find one specific stream of additional income, and others may pull together multiple money making ideas.
Sell Your Assets
You may have numerous assets carefully stored away in a unit that you can liquidate for necessary cash. This may include selling something as large as a boat or RV, or it may include selling old jewelry, electronics, and antiques. Some assets may cost money to maintain, so selling assets that require maintenance can be beneficial in multiple ways. Use any proceeds to make a large debt reduction payment.
Some people who have multiple high interest debts or who have multiple revolving debts may benefit by refinancing and consolidating debts. Doing so may establish your debt on a fixed payment plan with lower monthly payments. This can help you to make your payments on time, and it may even free up cash that can be used for larger debt reduction payments.
Ask for Help
These steps may be very effective for many people, but you may find that these steps are not enough. Consider contacting your lenders to ask for assistance. For example, you may be able to modify your mortgage payment. By arranging a new mortgage payment plan you may be able to use the extra money toward paying off your debt.
While you understandably may be stressed by your current circumstances, avoid panicking. Consider how you can apply multiple steps mentioned here to improve your financial situation substantially.
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