5 Ways to Avoid Filing Bankruptcy
1. Start saving while you’re financially stable.
Ideally, you should have enough to pay your bills for six months out of your savings, though a common rule of thumb is three months.
article eHow.com
2. When you start anticipating rough times, start planning ahead.
If you find out that your company is planning layoffs in your department in a few months, cut back on spending now. If you stop paying $100/month for cable now, for example, then not only can you easily put the $100 into savings while you’re waiting to find out if you’re one of the ones being laid off, in the unfortunate event you are laid off, it’s one bill less that you’ll have to worry about, and you can use those funds for the necessary bills like your mortgage and health insurance, etc.
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3. Make it a point to keep your credit card balances low all the time. It’s easy to pay for a major splurge on credit, but it’s not as easy to deal with the $200 monthly credit card bill when you’ve just lost a large amount of income or have a major unexpected bill. Plus, if you get in a bind, having the credit card available to use means you have some funds available for necessities and bills in the interim.
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4. Save money to purchase items cash instead of taking out credit or buying on credit.
You need/want a new sofa, and the store offers it with zero interest if paid in full within six months. Two months in, you get laid off. Now you are stuck with an extra bill for something you thought you could afford, but now you can’t. Had you saved the money to purchase the couch with cash, you would not have the bill, but you would have also saved a little extra to help you through until you find a new job.
5. When all else fails, you should try to negotiate with your creditors.
Although some creditors will not work with you, many will, especially if you’re on the verge of bankruptcy. It’s in their best interest, because if you file bankruptcy there is a very good chance the creditor will not be paid anything, but if they work with you, they get paid something on the debt.
article ConsumerReports.org
Updated March 13, 2013
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