For people who seek financial freedom, bankruptcy is the worst thing that could happen.
Once you declare bankruptcy, your credit standing gets blemished, making it harder for you to obtain credit in the future.
Moreover, it may affect your employment options.
With the current global economic crisis, proactive steps must be taken in order to avoid bankruptcy.
1.
Budget.
Forget about extravagance and live within your means.
Millionaires become who they are because of their frugality.
  2.
Prepare for the unexpected.
When planning a monthly budget, allocate some money for an emergency fund, so you will not be caught unprepared.
  3.
Sidestep the credit card trap.
Excessive credit card use contributes to bankruptcies, so remember to use your credit card wisely.
Experts say people who make minimum payments only will go on paying for 10 to 20 years for their credit card.
  4.
Be wiser as you age.
Bankruptcy happens not only to the young and reckless.
A great number of older people are filing for bankruptcies and ending up broke in retirement.
Plan your finances well so that when you reach the retirement age, you won't have problems with your credit card and other debts.
  5 Keep in touch.
Do not ever hide from creditors.
Be as honest as possible with them and craft out an acceptable payment plan.
  6.
Make practical choices.
Be rational in dealing with debt.
A tip is: sum up your debt and divide it by 48 months.
If you think you can't pay it off in four or five years, then you only have two choices: cut expenses or increase your income, or both.
Make some changes in your lifestyle or get a part-time job.
  7.
Ask for help.
A good credit counselor may be able to help you divert a possible bankruptcy.
  Declaring bankruptcy is merely a temporary relief.
Unless you restructure your life on a smart budget and debt-free lifestyle, you may be heading for the same financial mess all over again.