debt

Avoid Filing Bankruptcy in 4 Steps

3 Minute Read

Nobody thinks filing for bankruptcy is a great idea. Even quality bankruptcy attorneys will tell you it is a last resort. The fear, the shame, the guilt—it turns your world upside down. Although they do everything possible to avoid bankruptcy, sometimes good people have to go through it. But it’s definitely not an easy out.

Sadly, most people who file bankruptcy have lost hope and can't see another way out. They've given up. Most of those who come to our office or call The Dave Ramsey Show have options, but they’re too wrapped up in the situation to see alternatives.

But there is a way out. Avoid filing bankruptcy with these four steps:

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  1. Cover your basic needs.
  2. Sell everything in sight.
  3. Live on a budget.
  4. Get a second job.

No, these alternatives aren’t fun. But they do keep you out of court and in control of your financial situation. This isn’t a long-term solution, but it’s better than filing bankruptcy.

Cover Your Basic Needs

When you’re trying to crawl out of debt, the first thing to do is to make sure your necessities are taken care of: food, home (including utilities), basic transportation, and clothing. If you’re at the very bottom, make sure you pay for food and utilities. Then make sure your rent or mortgage is current. Lastly, work on the car payment. Don’t pay anyone else until these basics are covered. It’s not okay to lose the house because MasterCard is getting cranky with you!

Sell Everything in Sight

You have money lying around—in the form of DVDs, TVs, boats, clothes, books, furniture, tools, office supplies, craft supplies, and toys. Get rid of everything you don’t need. That sounds drastic, but so is filing bankruptcy. Take the money you make and put it toward getting bills (including the mortgage and the car payment) up-to-date. Those late fees are a killer.

Live on a Bare-bones Budget

This means no frills. No streaming services, no huge cell phone plans, no eating out, no vacations. Generic food, beans and rice, water from the tap. Coffee you brew, not a barista. You get the idea. And stick to your budget. Drastic times call for drastic measures.

Get a Second Job

Almost 8 million Americans are working a second (or third) job. Some are juggling two full-time jobs. If you have a family, that means sacrificing some time with them, and that’s hard. But remember, this situation is only temporary. You won’t have to live like this forever. The payoff will be worth the effort.

If you've already filed bankruptcy, you can get past it. Every successful person has failed at one point or another. They learned from their mistakes instead of carrying them around and reliving them. Make sure you learn from the experience.

If you need help getting your finances in order, contact the financial coach in your area.

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