4 Steps to Financial Freedom If You’re Close to Bankruptcy
Tuesday, January 2, 2018, 6:00 AM | Leave Comment
Being on the verge of bankruptcy is stressful and unpleasant by any measure.
Not knowing that you will be able to make good on your debts or even be able to support yourself and your family can make it feel as if you have no good options.
There are, however, practical ways to get yourself out of this position.
Here are four steps you should take to regain your financial freedom if you find yourself closing in on bankruptcy.
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Look Into Debt Consolidation
If you have several different debts and are having trouble keeping up with payments, you may be able to avoid bankruptcy by consolidating your debts.
In debt consolidation, the amounts you owe are effectively lumped together into one sum that typically has a lower monthly payment than all of your combined debts would individually.
Though it may not work if you’re too deep in debt, consolidating is an easy way to restructure the money you owe and make it simpler to pay back over time.
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Try to Increase Your Income
It may seem simplistic, but one of the most effective ways to get out of debt is to make more money that can then be used to pay back what you owe.
If you feel you’re not making as much as you could in your line of work, start looking around for positions that might pay you more.
Though you’re under no obligation to take any job if you don’t want to, it can be very useful to earn more money.
If your schedule allows, you might even consider taking on a part-time job in addition to your usual position and using all of the income from that job to pay down your debts more quickly than you otherwise could.
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Avoid New Debt
One of the biggest mistakes people who are already deeply in debt make is taking on more debt.
If you’re running close to bankruptcy, your first priority should be the avoidance of any new debt obligations.
Avoid using credit cards, cut down on your expenses and drive your old car for another year or two if you must.
Whatever you do, though, you shouldn’t take on new debt until the majority of your old debts are paid and you are in a position to manage new debt effectively.
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Declare Bankruptcy If You Absolutely Have to
Though avoiding bankruptcy should be your primary goal, there are circumstances in which declaring it will be the most sensible thing to do.
If you have to declare bankruptcy, be sure to find a good bankruptcy attorney. In many cases, a skilled attorney can help to protect some of your assets from the proceedings and prevent you from losing everything.
Regaining your financial freedom when you’re close to bankruptcy will be difficult. Once you’ve made it through, though, you’ll be glad you put in the effort.
Being close to bankruptcy should also teach you a lesson about debt management and how important it is to avoid taking on more debt than you can reasonably pay back.
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