Avoiding Bankruptcy: The Power Of A Plan

: Chris Lee Law Firm

  Filed under: Filing Bankruptcy

avoid bankruptcyFor many people, bankruptcy provides a unique opportunity to get out from under an overwhelming debt burden. It can be a great tool when few other debt relief options are available. Whether you have filed for bankruptcy in the past, or are hoping to stay out of the need for bankruptcy  in the future, there are ways to help yourself stay in a steady financial position.

There are life situations that can hit hard and cause people to end up with few choices through no fault of their own. However, that does not mean that some steps could have been taken to avoid the need for bankruptcy. The biggest, and most common, problem seen by people in significant debt is failure to act.

Money Management

Smart money management includes planning for unexpected costs and events. Even though someone manages their monthly income and expenses quite well, if they haven’t saved for unexpected expenses, they can end up in debt quickly. Medical bills are one of the most common expenses that people fail to plan for. They assume insurance will cover the bill and may  be surprised when they get a large bill in the mail.

Emergency Funds

In addition to saving for unexpected expenses, people should be saving for unexpected loss of income. Many people find themselves laid off after years of employment and have virtually no savings to cover monthly expenses. A good rule of thumb is to have enough saved to cover 3 to 6 months worth of expenses, which includes the mortgage or rent, utilities, clothing and food.

Credit Counseling

Managing money wisely and saving for unexpected events are great ways to prevent ending up in financial trouble. However, many people have no idea how to actually make these things happen. Credit counseling companies offer courses that can teach tools on how to develop a budget, manage money and using credit wisely. These courses are offered to anyone willing to learn and are affordable.

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