Whether it’s unemployment or a long established habit of overspending, there are a number of different reasons that can lead to potential financial difficulties for you and your family. And sometimes these financial down spirals can eventually force you into considering a bankruptcy declaration. However, bankruptcy is not always a viable option and hence, it is often better to avoid it altogether.
If you fear possible bankruptcy in the near future, these tips can help you recover.
Deal With the Credit Cards and Creditors First
Most people own multiple credit cards that have different due dates for payments. This often causes the trouble of keeping track and making timely payments. To avoid unnecessary late payment charges take relevant steps to switch all credit cards due dates to one convenient date.
Also, try and negotiate with your creditors and inform them about your current financial situation. See if you can sway them into lowering interest rates or working out alternative repayment plans that suit your circumstances. There is a good chance they’ll agree, because if they don’t they may have to lose all the money you owe them.
Lifestyle Changes Come Next
You’d be required to bring a drastic change to your spending habits and this may not come easy. A financial down spiral may lead you into considering completely quitting credit card transactions. Start with limiting yourself to just one credit card and focus on the things you NEED. A coffee from your favorite coffee shop every morning on your way to work is not something you need – brew it at home and save the bucks you spend on coffee each day.
Even if you’re cutting down on unnecessary expenditure worth $20 every day at the end of the month you’ll have around $600 (20 × 30) to pay off your debt without maxing out on your credit cards. Also, try to put off expensive purchases like a vacation or a car for later until your finances are stable again.
Budget and Keep Track of Your Credit Score
Get into the habit of maintaining a monthly budget. List down your incomes and your projected expenses and see how much you’re left with to repay your debts. It is very important to limit your spending to a minimum. A great way to do that is to allow yourself a weekly allowance and limiting your expenses to that allowance.
Try and work in a portion of saving even if it is a very small amount to begin maintaining an emergency fund that can help you in future financial crisis. You will also be required to keep a track of your credit score. Avoid taking any further debts to keep the score from worsening and make your repayments on time. Check it regularly in case you miss out on an important element that can have a significant impact on your creditworthiness.
In case you feel you’re already too deep into the debt pool, maybe declaring bankruptcy can save you from drowning altogether. Make sure you consult an expert bankruptcy lawyer before moving towards filing your bankruptcy petition.