Avoiding bankruptcy and staying solvent should be a serious goal for people dealing with debt and money problems.

While it is possible to recover from bankruptcy, nobody would like to file for bankruptcy if it could be avoided.

Following some simple tips can help you avoid bankruptcy and stay solvent this year.

Our 7 ways to avoid bankruptcy will explore avoiding both personal bankruptcy and business bankruptcy.

Ways to Avoid Personal Bankruptcy

Examine Your Budget and Make Short Term Sacrifices

If you are dealing with debt and want to avoid bankruptcy, you can examine your budget and cut unnecessary expenses.

Sit down and make a list of all of your expenses and separate them by a “wants” and “needs” column. Look at expenses and see what is in the “needs” column. These are expenses you should consider eliminating. While these sacrifices will be hard, cutting expenses such as eating out, going to the movies, or canceling your gym membership or cable can up to a lot of money that can be used to service your debt.

Living within your means and setting aside additional money for savings and debt repayment will feel good and can help you avoid bankruptcy.

Prioritize Debt Repayment

If you want to avoid bankruptcy and stay solvent this year, you must prioritize your debt repayment.

Make a plan for getting out of debt and stick to it. You might choose the”snowball method” of paying off the smallest balance debts first, or perhaps the “debt avalanche” repayment strategy where you pay off the highest interest debt first will work best. Whatever works best for you, make paying down your debt a main priority.

Increase Your Income

If you are facing the prospect of personal bankruptcy you should increase your income if possible. It’s time to put aside your pride and…

Sell Your Assets

Before you do anything as drastic as selling your assets, you should consider all other options to avoid bankruptcy. You should also speak to a Licensed Insolvency Trustee about personal bankruptcy; your assets might be protected under the bankruptcy exemptions. However, if you have some assets you could part with to raise extra money to pay down debt, you should consider it. Get creative. If you have skills or services you can offer you can offer to sell your services.

Make a Consumer Proposal To Your Creditors

A consumer proposal is the most popular alternative to bankruptcy available in Canada. By making a consumer proposal agreement with your creditors you can avoid bankruptcy and cut your debt by as much as 70% or more.

Ways to Avoid Business Bankruptcy

Depending on how your business is structured, you could file business bankruptcy for your business debts. For small business owners that would like to avoid bankruptcy you can take certain steps as a business owner that could be taken.

Review Your Business Plan

Businesses struggling financially should get out their business plan and examine it.

Your business plan is a working document that can be examined and updated. When your business’ circumstances change, your business plan should change to reflect the state of the business. An updated business plan will help
your business do proper financial planning to help your business avoid bankruptcy.

Give Your Employees the Chance to Turn Themselves Around For the Good of Your Business

When your small business makes changes, your employees will have to change with the business as well. If you need to make changes to your business, speak with your employees and explain the situation. Give them the opportunity to work with the company for the good of the business.

If your employees do not want to change with the business you can let them go so you can focus on your dedicated employees.

Following these tips can help you avoid bankruptcy and stay solvent this year.