Unfortunately, many people live with the heavy burden of being indebted. Sometimes, the debt is so huge that declaring bankruptcy looks like the only thing left to do.

But however, going bankrupt tears your credit score to shreds. Therefore, you will not be able to get other loans in the near future. Bankruptcy is the worst thing you can do when you’re in debt. It sounds hard to believe, sure, but it’s nothing but the truth.

In order to avoid the repercussions of bankruptcy, you need to learn how to prevent bankruptcy. There are many ways of doing this, and I’ll present them briefly.

How to Prevent Bankruptcy – Top 4 Strategies

  1. Start selling things you don’t need anymore

It might sound childish, but having a huge garage sale can actually return some really good money. If you’re in the position to do so, you can sell your car or your house, but this should be the last resort. Another good solution on how to prevent bankruptcy would be to consider moving to a smaller place, with a lower rent, until your financial situation improves and you get rid of debt. No-one can deny that this can be a difficult emotional time for someone, but even debt counselors will vote for it.

It’s certainly easier to learn how to prevent bankruptcy by selling some of your stuff than to live with the consequences of declaring it. In a mild case, you will be parted with your things only temporarily. Bankruptcy is a permanent solution that will be branded forever on your credit history, making it almost impossible for you to acquire a loan.


  1. Talk to your lender

If the debt is unsecured and you declare bankruptcy, your lender will not recover his money. It’s to his own advantage to help you pay the debt instead of going bankrupt. If you’re having severe financial difficulties, discussing with the creditor can go a long way.

He might be willing to tailor a repayment program for you so that he can get at least some of his money back. Bankruptcy is a lose-lose situation, and if there’s something creditors hate with a passion is to lose money. This can peak with lawsuits, and the last thing you need when you’re broke is to be sued by a lender. Communication is key.

Call a meeting with the one who gave you the money and tell him/her why you can’t stick to the repayment program as it is. He/she will definitely understand your point and will be willing to help you out. Make sure you don’t lie. At all. It’s for your own good.

  1. Consider debt settlement

Debt settlement is a consensus between you and your creditor in which the latter settles for less than the sum of the debt, provided you can actually pay even a fracture of the sum. It doesn’t work for all types and the requirements are pretty strict, but it is definitely worth a try.

It’s a lot better than filing for bankruptcy. Search for “how to prevent bankruptcy” and this option will appear in more than 90% of the time. Debt settlement is a tedious, expensive process. In some cases, huge sums of money are at play. Of course, in the context of a debt settlement, the lender loses money, not you. We’ve mentioned that lenders hate to lose, but sometimes there’s nothing else they can do. Instead of getting no money at all from you, they’d rather get a part.

But then again, debt settlement is still a better alternative than bankruptcy. See if you meet the requirements and talk to a debt counselor.


  1. Hire a debt counselor

You might not be able to reason with the creditors by yourself. A debt counselor, on the other hand, can be luckier, particularly because you’re definitely not the first person in the world to see bankruptcy as a saviour.

A debt counselor knows how things work and how to prevent bankruptcy. Even though your lender might not be willing to accept your strategy, the counselor could potentially change his/her mind. It’s an expense you should obviously consider. And if you’re wondering what he/she is going to say to you once you mention “bankruptcy,” it’s definitely  “Don’t do it!”


This is how to prevent bankruptcy. All these four methods have been tested time and again by a multitude of indebted persons. They truly work, and they are all better alternatives to bankruptcy. Another strategy would be to get a bad credit loan.

Most people don’t get that bankruptcy can destroy their chances of borrowing money ever again. They have fallen prey to the misconception that this solves all of their problems. The reality is altogether different.

No matter how hard it is to give up some of your assets or to reveal your situation to your creditor, bankruptcy is not something you want.

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