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Simple steps for debtors to avoid filing for personal bankruptcy

Many people cannot bypass getting into debt at some point in their lives. Families in New Jersey and across the United states are saddled with more than $7,000 in credit card debt on average, plus the debt from mortgages and student loans. In cases where the debt is even higher, many people turn to personal bankruptcy to help them get back on their feet again. Here are some tips to help with crawling out of the mountain of debt and getting back onto stable financial footing.

Oftentimes, people fall into the credit card debt trap because they do not have a budget to manage what they are spending versus their income. The snowball method is a great way to begin paying down the debt. A person places as much money as he or she possibly can onto the smallest debt to pay it off, and then he or she continues onto the next smallest debt until all the debt has been cleared.

Although it may seem like a great first option, closing down credit cards can negatively impact one's credit score. It is best to leave the cards open, so a person should find other means -- such as shredding, freezing or hiding -- to avoid the temptation of using the open accounts. Another way to avoid temptation is for a person to avoid his or her favorite stores and/or unsubscribe from email lists, magazines or catalogs that may prompt impulse spending.

One of the best ways for New Jersey residents to avoid further debt is to shift the focus from spending money to saving money. The excess money that may surface from avoiding the extraneous spending can be placed into an emergency savings, used to pay down debt or set aside for vacations. For many people, the amount of money coming in is not nearly enough to pay their creditors. In those extreme cases, filing for personal bankruptcy can be a great way to start over fresh with a clean slate and be relieved from debt for good.

Source: myfoxny.com, "Wipe out debt for good", Andrew Housser, July 29, 2014

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