Whether you were affected by a personal hardship or a pandemic-related job loss, declaring bankruptcy might give you the breather you need to regain your financial footing. In addition to stopping the flood of collections calls, this legal process can discharge some of your debt. However, if you’re hoping to avoid this process, the following tips may help.

How to Steer Clear of Bankruptcy

1. Eliminate the Excess

First, try to cut extraneous expenses—those associated with wants rather than needs—to 5–10% of your monthly income. For example, cook at home rather than eating out and opt for less expensive forms of entertainment—such as YouTube® videos or books borrowed from the library.

2. Stick to a Repayment Schedule

To avoid bankruptcy, you’ll need to at least meet the minimum payments for your credit cards and loans. If you’re having trouble remembering when this money is due, sign up for automatic payments or put reminders in your smartphone for a few days before the due date. 

If you don’t have enough to meet your minimum payments, consider taking on freelance work. For example, you could drive for a rideshare service or walk neighborhood dogs. You may also be able to sell some of your old clothes and electronics online. 

If you can, pay more than the minimum to help stop your debt from collecting interest.

3. Settle Your Debts

When minimum payments are out of reach, talk to your creditors and see if they’re willing to negotiate. Some lenders will choose to “settle” your debt or accept less than what you owe if it means that they get part of their money faster. However, this means you’ll probably have to pay them a large lump sum, not small, regular payments. For example, if you owe them $5,000, they might be willing to accept $3,500 and close out your line of credit.

If you have considered filing for bankruptcy, rely on Sam Turco Law Offices of Omaha and Lincoln, NE. Since 1992, this attorney has been helping clients resolve their debt, providing compassionate assistance. To learn about his legal services, visit him online. You can also call (402) 614-7171 to arrange for a bankruptcy consultation.