How to Avoid Bankruptcy
Total your monthly expenses., Add up your monthly income., Cut unnecessary monthly expenses., Seek credit counseling for help with your budget., Print your new budget., Earn more money., Sell possessions., Pay with cash.
Step-by-Step Guide
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Step 1: Total your monthly expenses.
The easiest way to avoid bankruptcy is to pay off your debts by coming up with a budget.
Begin by going through your monthly expenses.
You can either write down a list of monthly expenses or look at your credit card and debit card statements for the past six months.
Common monthly expenses include the following:rent or mortgage utilities food health care insurance transportation child care expenses minimum debt payments -
Step 2: Add up your monthly income.
Remember to include income from all sources, not just your regular job.
For example, total the following, if applicable:wages, salary, or tips bonuses and commissions retirement benefits disability benefits child support payments alimony payments , The goal is to free up as much money as possible to pay off your debt.
Of course, you can’t lower fixed expenses, such as your rent payment, car payment, or health insurance premiums.
However, anything that isn’t a necessity should be cut and redirected to debt repayment.
Consider cutting the following: vacation visits to the spahigh-speed Internet (unless you work from home) gym memberships subscriptions to magazines or Netflix alcohol and cigarettes your landline phone (if you have a cell phone) cable television, A credit counselor can assess your debt and come up with a budget that works for you.
Credit counseling is required before you file for bankruptcy, so you might as well visit a credit counselor anyway.You can find a credit counselor by visiting the U.S.
Trustee’s website, which has a list of approved credit counselors.
Go here: https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111.
Click on your state.
You can also find credit counseling at many credit unions, universities, or housing authorities.However, the counselors listed on the Trustee’s website have been approved and are legitimate. , You should actually type up a budget so that you will know each month how much you can spend.
Tape the budget up around your house so that you always see it.
Also carry a copy around with you so that you will know exactly how much you can spend each month on groceries, for example. , In addition to cutting expenses, you can also try to increase the amount of money that you make each month.Maybe you can work more hours at your job.
Or you might be able to pick up a part-time job.
Every little bit helps.
Think about freelancing on the side.
For example, if you like to write, you might write or edit articles in your free time.
If you like to bake, you could run a small catering business that specializes in desserts.
Even a minimum wage job can make debt repayment easier.
Fifteen hours a week at $10 an hour is an extra $150 a week.
Over a year, that equals $7,500.
Although you’ll have to pay taxes on this amount, there should be over $5,000 left to contribute to your debt. , You probably got into debt buying things you didn’t really need.
Now you can sell them and use the money to help pay down your debt.
Go through your possessions and identify what you can live without.
Hold a yard or garage sale to sell big ticket items, like furniture or electronics.
You can also sell low-value goods in a yard sale, such as books or CDs, which will cost a lot to ship if you sell them online.
You can also put items on eBay or Craigslist to sell., To make sure you stick to your budget, you should try to pay for everything using cash.
Cut up your credit cards or freeze them in a glass of water so that accessing them is difficult. -
Step 3: Cut unnecessary monthly expenses.
-
Step 4: Seek credit counseling for help with your budget.
-
Step 5: Print your new budget.
-
Step 6: Earn more money.
-
Step 7: Sell possessions.
-
Step 8: Pay with cash.
Detailed Guide
The easiest way to avoid bankruptcy is to pay off your debts by coming up with a budget.
Begin by going through your monthly expenses.
You can either write down a list of monthly expenses or look at your credit card and debit card statements for the past six months.
Common monthly expenses include the following:rent or mortgage utilities food health care insurance transportation child care expenses minimum debt payments
Remember to include income from all sources, not just your regular job.
For example, total the following, if applicable:wages, salary, or tips bonuses and commissions retirement benefits disability benefits child support payments alimony payments , The goal is to free up as much money as possible to pay off your debt.
Of course, you can’t lower fixed expenses, such as your rent payment, car payment, or health insurance premiums.
However, anything that isn’t a necessity should be cut and redirected to debt repayment.
Consider cutting the following: vacation visits to the spahigh-speed Internet (unless you work from home) gym memberships subscriptions to magazines or Netflix alcohol and cigarettes your landline phone (if you have a cell phone) cable television, A credit counselor can assess your debt and come up with a budget that works for you.
Credit counseling is required before you file for bankruptcy, so you might as well visit a credit counselor anyway.You can find a credit counselor by visiting the U.S.
Trustee’s website, which has a list of approved credit counselors.
Go here: https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111.
Click on your state.
You can also find credit counseling at many credit unions, universities, or housing authorities.However, the counselors listed on the Trustee’s website have been approved and are legitimate. , You should actually type up a budget so that you will know each month how much you can spend.
Tape the budget up around your house so that you always see it.
Also carry a copy around with you so that you will know exactly how much you can spend each month on groceries, for example. , In addition to cutting expenses, you can also try to increase the amount of money that you make each month.Maybe you can work more hours at your job.
Or you might be able to pick up a part-time job.
Every little bit helps.
Think about freelancing on the side.
For example, if you like to write, you might write or edit articles in your free time.
If you like to bake, you could run a small catering business that specializes in desserts.
Even a minimum wage job can make debt repayment easier.
Fifteen hours a week at $10 an hour is an extra $150 a week.
Over a year, that equals $7,500.
Although you’ll have to pay taxes on this amount, there should be over $5,000 left to contribute to your debt. , You probably got into debt buying things you didn’t really need.
Now you can sell them and use the money to help pay down your debt.
Go through your possessions and identify what you can live without.
Hold a yard or garage sale to sell big ticket items, like furniture or electronics.
You can also sell low-value goods in a yard sale, such as books or CDs, which will cost a lot to ship if you sell them online.
You can also put items on eBay or Craigslist to sell., To make sure you stick to your budget, you should try to pay for everything using cash.
Cut up your credit cards or freeze them in a glass of water so that accessing them is difficult.
About the Author
Angela Martinez
Brings years of experience writing about lifestyle and related subjects.
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