Let’s talk about avoiding bankruptcy and what you can expect in each situation. Some options are cheaper than others, and once you’ve considered all the options for getting out of debt, bankruptcy may be the best solution for you.
1. To earn more money
This is actually a piece of cake. If you want to escape your debt and avoid bankruptcy, the best thing you can do is make more money. I know this is easier said than done, but have you really looked for creative, unconventional ways to increase your monthly income? Here are some of my suggestions that have helped previous customers:
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Rent a room to earn rental income.
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Get a second job;
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Ask for a raise at your current job;
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Let the children work, and when they work, stop paying their expenses.
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Hold a garage sale or sell items you no longer use on Craigslist;
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Start a side business repairing or repurposing items for resale
2. reduce costs
The budget book only has two pages; Earnings and expenses. Another best strategy is to not only increase your income but also reduce expenses. The remaining money can then be used to pay off debts and avoid bankruptcy. Here are some often overlooked ways to cut costs:
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Transportation: Reduce transportation costs by using public transportation to work. You will be surprised to find that using public transportation means you have less stress. If you plan on driving, make sure your car is well maintained and paid off. Maybe you need to downsize and buy a cheaper car paid to save on car fees.
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Insurance: Home and car insurance costs can be reduced by reviewing the amount and type of insurance policies you have. If your car is older, you should consider foregoing any property damage insurance (comprehensive/collision) and only retaining liability insurance. The liability limits in insurance policies simply need to be sufficient to protect your assets. So if you don’t have any equity in your car or house, you don’t need cap insurance. Also look around for insurance.
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Utilities: Turn off the lights and air conditioning. Cutting your cell phone bill or cutting your landline connection. Call any company to reduce services that will lower your bills or cut them altogether.
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Groceries: Use couponing only where it makes sense by purchasing shampoo, soap, toothpaste, tableware and laundry items using coupons. Paper products are another great household item to purchase with coupons. Reduce your grocery bill by planning your weekly meals before you go shopping and considering other meals that you can use similar ingredients for. Not only can cooking at home save you money because it’s cheaper than eating out, it can also help you live healthier.
Streamlining the budget through increased income and reduced expenses means that it is a long-term lifestyle commitment that may take longer than five (5) years to pay off all debts. Even if you maximize this strategy and use all of your disposable income on debt, it may not be enough and you may still find yourself facing bankruptcy. However, I still believe that knowing your numbers is an important step in financial transformation and debt elimination, no matter what direction you go.
3. Debt settlement
If you are behind on credit card payments, you can negotiate it. sometimes for pennies on the dollar. This may seem like a money-saving strategy, but it can actually leave your credit score in tatters. First, you’ll need a substantial savings account so that you can pay a lump sum to pay off the debt when you close a deal. Make sure you get a written agreement and ask to have the trade line removed from your credit report. You may not get a credit cleanup, but it doesn’t hurt to ask. This can be an effective debt elimination method if you only have one or two debts to work with. More than that and a Insolvency case would be a cheaper, better and faster way to get out of multiple debts at once.
The consequences of paying off debt are not only that you will have to repay the debt, but it can also affect your credit score.
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