If you have major financial issues, filing for bankruptcy might seem like the most logical solution. However, it can have a long-term effect on your finances. Before filing for bankruptcy, there are some steps you can take to potentially lighten your financial burdens. 

Determine How Much Disposable Income You Have

You need to determine what you can reasonably afford to pay each month towards your debts. All of your income after rent, food, and other necessities are paid should be going towards taking care of your debts. You can set aside a small portion of your funds towards savings, but paying off your debts needs to be one of your top priorities. 

Prioritize Your Debts

After you know how much you can reasonably pay towards your debts, you need to write down all of your creditors. Separate your creditors into secured and unsecured debts. 

Secured debts are those which are backed by collateral. For instance, a car loan would be considered to be secured because your car is the collateral. Unsecured debts have no collateral backing them. 

Your list then needs to be prioritized by which debts are most important. This is the order in which you should pay them. 

Negotiate With Your Creditors

Your creditors are more interested in getting paid than you know. If you file for bankruptcy, there is a possibility that your debts will be discharged and your creditors will not be paid. To avoid this, many creditors are willing to negotiate. 

Start with your most important debts first and attempt to negotiate with the creditors. Some creditors might be willing to offer a lower interest rate or get rid of the interest owed altogether. Do not let the creditor push you into accepting a deal that you cannot afford. 

Sell Property

If you file for bankruptcy, some of your assets can be taken and sold to pay off your debts. To avoid bankruptcy, you can take this step yourself and have more control over the sale price and which debts are paid off. 

Get an appraisal of your assets before selling so that you are aware of how much they are truly worth. 

There are many other steps you can take to avoid filing bankruptcy. Consult with a debt consolidation program or attorney to find out what other steps you can take. By taking the time now to reorganize your finances, you can avoid the long-term consequences of filing.