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How to Avoid Filing for Bankruptcy


Debt is extremely easy to get into and challenging to escape from. If you find yourself in over your head, you may need to seek professional help to protect you from garnishment and to stop debts from going to collections. While it can be very tough to face these problems, acting fast can reduce the pain.

How to Avoid Filing for Bankruptcy

On Your Own

To lower your risk of defaulting on your debts, try to sit down with your bills and pay the minimum on everything as it comes in. If you can cover the minimum payments with your current income and your bank account is still in positive territory, you may be able to build a plan to get yourself out of debt.
The first step is to stop using credit cards. Take them out of your wallet and put them somewhere inconvenient. If you have a friend or loved one who’s willing to help, ask them to hold onto your credit cards and only give them back to you in the event of a real emergency.

Many Money Real

Now that the cards are out of your wallet, go on a money fast. For the next two weeks, buy nothing unless you absolutely have to have it. Put fuel in your car, but only enough to get to work. Buy groceries only after the cupboard and refrigerator are bare. Spend as close to nothing as you can for two weeks.

When your next paycheck arrives, sit down with your bills and pay the minimum again. Pull cash out of your bank account and use this to continue buying only what you must have. Exchange the paper money in your wallet for receipts to serve as a record of what you spent.

Monitor Your Receipts

At the end of the next two weeks, take out the receipts. Get out pens of three different colors. Use your favorite color to check off the purchases you made that were completely worth it. Use your second favorite color to check off the stuff you had to buy to survive. Use the least favorite color to note the things that were a waste of your money and energy.

Keep these colors in mind the next time you need to buy things. Remember how great, or bad, it felt to check off the things on your receipts. Aim for good spending on every item you consider.

Figure Out What You Want

Possession doesn’t have to equal enjoyment. You may want to watch a movie, but this doesn’t have to mean that you must buy a television. Fix a pan of brownies and make a date with a friend or loved one. You’re contributing and socializing, and you have brownies. Chocolate is cheaper than television.

Get into the world of barter. If you want to go camping but have little gear, put out the word. You may have a friend or a neighbor with gear that’s cluttering up their garage. Spend a weekend helping them clean up the garage, borrow their gear for the next weekend, and decide if you need to invest in your own gear.

When You Need Help

If you can’t make the minimum payments, or if things have already gone to collections and the phone calls are driving you mad, it’s time to get some help. Discuss your debt situation with a professional, and consider consumer proposal in Edmonton, for example, or wherever you are living at the time. A consumer proposal will cause your credit rating to drop, but not as much or as long as a bankruptcy would

Be aware that a consumer proposal can only help if you’ve got a great deal of unsecured debt. If you’re struggling with an unmanageable house or car payment, you may still be facing bankruptcy. However, getting the payments on your credit cards down may make it easier to catch up and stay caught up on your mortgage or car loan.

Getting a handle on your debt may mean that you need to figure out why you buy what you buy. If you really like a great meal in a fancy restaurant, you may need to cut back until it’s special again. If you truly love travel, you may be able to rent or buy a smaller home. Getting a handle on your spending can be as simple as figuring out what you truly value.


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