How to Get Out of Debt Without Bankruptcy

When consumers are in dire financial straits, they will often consider filing for bankruptcy to alleviate their financial woes. However, a bankruptcy can have significant long-term impact on a consumers financial profile. In some cases, bankruptcy is unavoidable. However, researching all of your options is imperative to ensure that you will make the best decision for your situation. Understanding how to get out of debt without filing for bankruptcy will better prepare you for this decision.

Instructions

1

Open your spreadsheet program and list all of your debts. Create a column for the debt account name, account number, balance, minimum payment and payment address information. If you do not have a spreadsheet program (like Microsoft Excel) consider downloading an open source spreadsheet program like that found in Open Office. Open source software is free and community supported.

2

Organize your debt by type of debt. You will want to list secured debts at the top of the list and unsecured debt at the bottom.

3

Keep your mortgage or rent payment up-to-date. If you do not make enough income in a month to meet all of your monthly debt obligations, it is important to not let your home payment fall behind. You need to have a place to live. The same holds true for utilities.

4

Call your student loan lender if you have student loans as part of your debt load. If your financial situation is such that you are considering bankruptcy, it is likely that you will qualify for a hardship deferment of your student loans. If you do not qualify for a deferment, ask your student loan lender about a forbearance. This will allow you to forego making your monthly minimum payment on your student loans for a set period of time. The extra money you have per month may be just enough to prevent you from needing to file for bankruptcy.

5

Consider selling cars that have a high balance or a disproportionately high monthly payment. Although automobiles are a necessary in many situations, a car with a high payment is not. A $2,000 car will go a long way and the $500 a month you save by selling your financed car may prevent you from filing for bankruptcy.

6

Contact your credit card companies to ask about an interest rate deduction or other hardship plan. If you are unable to make your current monthly minimum payments, some credit card companies are willing to work with you. It is important to understand that the credit card company may close your account as a result so inquire about the effects of such an agreement.

7

Get a second job. Depending on the hours that you work during your main job, getting a second job may be a great way to help you get out of debt more quickly and avoid bankruptcy. Naturally you will be tired but if you look at the second job as a temporary process that expedites your get-out-of-debt plan then it will make the extra hours a bit easier to handle. Delivering pizzas part-time can net some employees an easy $1,000 in a month.

8

Cut out luxury expenses. Expanded cable is a luxury and can run upwards of $50 per month with some carriers. If your financial situation is dire, this $50 per month will come in handy. Look through all areas of your life where you can cut out the extras.

9

Budget your money. Create a budget for every month and stick to it. If you budget $300 for groceries, do not spend extra. Plan your meals and bargain shop in order to stay within that $300 budget.

10

Stay focused. By following the steps detailed here, you will be able to get out of debt without having to file for bankruptcy.