If you own a business, or even if you’re just a regular person, you have to manage your finances and ensure your credit is good. Otherwise, you may end up having to file for bankruptcy. If you would like to avoid going bankrupt, keep reading to learn about 5 ways to avoid going bankrupt.
1. Don’t take out too many loans
Banks and loan sharks will happily offer you far more credit than you’re able to pay off, hoping that you will pay interest over time. It’s important to avoid saying yes to loans that you don’t need. If you can’t be trusted to pay off your credit card and loans each month, it’s better to keep one small credit card in case of emergencies and stick to using cash or debit.
2. Stay on top of your payments
If you already have debts, the best thing you can do to improve your credit score and avoid going bankrupt is to stay on top of your payments from month to month. Take note of when each payment is due, and set a reminder to make the payment on time. You may also wish to set up automatic bill payment to ensure the bills are paid on time every month. This simple act will raise your credit score like crazy.
3. Use a budget
If you’re struggling to make ends meet, having a budget can be the difference between making your payments on time and defaulting on your loans. Set up your budget using a free online budgetting tool, or use a simple spreadsheet or even a sheet of paper. Have one column for income, another for expenses, and make sure it all adds up. Look online for tips on how to make a great budget.
4. Get help
If you’re struggling to make your payments and feel like debt is consuming your life, you may need professional help. Some people may be able to recover their credit score by talking to a financial advisor and getting a plan together. However, you may also need to call a bankruptcy advisor and consider filing for bankruptcy. This process is easier than you think, and it may be a better option than trying to manage your debts.
5. Consolidate your loans
If you have a ton of credit cards, loans, and other debts, and you’re having trouble managing everything, you may wish to consolidate your loans. What this means is you’ll speak to a professional advisor who will purchase your debts from you, stopping the collector’s bills, and making it so you have one simple monthly payment. If this sounds like the right option, you should research loan consolidation in your area and meet with a few different advisors. Look for the lowest debt and lowest interest rate they’re willing to give you. This simple act can repair your credit score and ensure you don’t have to file for bankruptcy.