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Habits that can Help You Avoid Bankruptcy

Filing for bankruptcy is a stressful process that will cost you money and lower your credit score. Although it exists if you need it, you are far better off financially by working to keep yourself from ever needing to file for bankruptcy.

It is important to remember that although you can make an effort to keep your debt levels low and reduce your chance of having to file for bankruptcy to manage your debt, you can find yourself facing an emergency where you have to take on steep debt and subsequently, use bankruptcy as a tool to get out of it. Bankruptcy is not a moral failure.

Paying Your Credit Card Balance Off Every Month

One of the most helpful habits to establish for yourself now is to pay off your credit card bill in full every month. When you do not carry a balance, you are not charged interest, which will save you money over the course of the years you have your credit card. Paying your card in full each month will also keep you disciplined to avoid spending more than you can pay off.

Creating an Emergency Fund and Contributing to it Regularly

An emergency fund is exactly what is sounds like – a stash of money you have to cover emergency expenses if they arise. You can choose for yourself what constitutes an emergency that makes it necessary to use money in an emergency fund. Common reasons why individuals access emergency funds include:

  • Unexpected job loss;
  • Damage to a home or vehicle that is not covered by insurance;
  • An unexpected health problem that forces an individual to take time off work or buy medical devices out of pocket; and
  • Expenses related to a death in the family.

Sticking to a Budget that Keeps Your Spending Within Your Means

Like paying off your credit card each month, the greatest benefit to making and keeping a reasonable budget is how it alters your mindset surrounding the money you have. This, too, will help you save money by keeping you from going into debt for purchases you cannot afford to make.

Buying a Sufficient Amount of Insurance

Accidents happen. Your home could catch on fire or you could hit a deer with your car. Both of these scenarios can mean high home and vehicle repair bills and possibly high medical bills for you. When you are shopping for any type of insurance, do your research to find the most comprehensive coverage you can afford. You might not need the most expensive package available to you, but you also should not choose the cheapest one just because it has the lowest monthly payments. Find an insurance policy that fully covers your needs because if an accident does happen, having it can save you from going into debt to cover accident expenses.

Work with an Experienced Bankruptcy Lawyer

If you are considering filing for bankruptcy, discuss your case with one of the experienced bankruptcy lawyers at Moen Sheehan Meyer, Ltd. Contact our office today to schedule your initial consultation with us.

Published November 21, 2017
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