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Many Americans want to have a lifestyle that is beyond their financial means. Some of these folks get into debt so deeply because of this that the only option they think they have is to file for personal bankruptcy. Doing this can ruin one’s credit standing and may even cost an individual his home. The following is designed to provide insight about ways to prevent bankruptcy so no one has to go through the credit recovery process that often results from this course of action.
Pittsfield, MA; Nov. 2, 2012 – Life is good. Finances are in great shape, and it is not uncommon to purchase high-cost items on credit. The interior and exterior of the house look terrific, largely due to the architectural firm and interior decorator hired to make it so. Suddenly, one of the monthly household income providers loses his job, drastically decreasing the finances of the household. When the bills come due each month, it becomes impossible to pay them, so the decision is made to file for bankruptcy. Before taking this irreversible step, know that there are many ways to avoid bankruptcy. Read on to learn about them.
Live within one’s financial means, not above them, regardless of how well things are going. Rather than going into debt to obtain desired items, put money into CD accounts or stocks and bonds. Doing this will provide for unexpected financial difficulties and will earn interest over time, making more money. Also, instead of purchasing a new vehicle with a loan, look into buying a reliable pre-owned auto outright so there are no monthly payments on it. Be sure, when considering a new house purchase, that it will have an affordable mortgage payment if one is out of work for a few months or has to take a pay cut to remain employed.
Other ways to prevent bankruptcy include cutting back on extras such as dining out once or twice a month and going to the movie theater to see a film. Hold a garage sale and sell items no longer necessary or useful and put the money away for a rainy day. Develop a financial plan that is comprised of regular household expenses plus money owed on bills. Even if the plan is not feasible, it may be helpful to show creditors that a financial hardship exists and to ask for their help. Close credit card accounts and talk with creditors to see if a mutually acceptable repayment plan can be developed, one with lower interest rates or different terms. If necessary, look into employing a consumer credit counseling service to help devise a reasonable monthly budget.
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