Sometimes bankruptcy is simply unavoidable and we face so many unexpected things in life. However, there are steps we can do to prevent such an occurrence. There are things that we should do and should not do. We should be aware that bankruptcy is a serious financial problem and it can cause familial difficulties, depression and stress. We won’t make it go away by ignoring it.
Bad decisions like borrowing large sum of money for inessential things, such as vacation and fancy car could have disastrous consequences. Thanks to penalties and increased interest rates the balance can triple in a number of years. Here are things we should to avoid that:
1. BUDGET EARLY:
If there is one thing that can really effectively prevent the occurrence of bankruptcy is proper budgeting. Some people can get used to luxurious lifestyle and they can’t readjust that when things don’t go too well. We should reassess our situation realistically make some adjustments when necessary. There are plenty of instructions to help us do this and many of them are very simple to follow.
We should make sure that all members in the family are agree to do the same thing and review the weekly expenditures. Controlled budget and spending are what’s needed to avoid bankruptcy.
2. DON’T BRING CARDS, ONLY LIMITED AMOUNT OF CASH, IF POSSIBLE:
People who have reasonable budget shouldn’t have problem bringing only a limited amount of cash when they go outside. This simple step should help us reinforce our budget and keep us accountable. We should leave ATM cards, debit cards and especially credit cards at home whenever possible. They should be used only when necessary, such as buying groceries and paying bills.
By avoiding accumulating further debt, we can have a proper safety net to deal with true emergency. Bringing all cards in the wallet is like carrying a sack-load of money and much of it may not be our money.
3. PAY BILLS AND DEBT INSTALMENTS ON TIME:
This one likely area where people often make mistakes. Missing bill payments could incur penalties and late fee. Unfortunately, credit card companies don’t have sympathy in any of this situation and higher interest rate may drag us deeper into debt. Bankruptcy could eventually occur and we may find no way to get out. This won’t be an issue if we have proper budget.
We will pay our bills when it is the time. Late payments can have significant effects on home mortgage and vehicle loans. Missed payments can be disastrous to our finances and they can be handled rather easily.
4. AVOID PAYDAY LOANS:
We should avoid payday loans whenever possible. These credit arrangements can be bad for our finances and people who file for bankruptcy may also be burdened by immense payday loan debts. Lenders may charge us outrageous interest rates and this can be bad. Lenders may charge very high interest rates, which compound on a weekly or even daily basis.