Filing for bankruptcy is serious business.  It impacts your credit for years. And many job applications ask the question, have you ever filed for bankruptcy?  It is in your best interest to avoid having to answer yes to this question for the rest of your life.

While bankruptcy may be the only resort for some, it may also be avoidable with a carefully constructed plan.  Before filing, try these three steps:

1) Take a serious look at your expenses – This doesn’t mean stop shopping at Whole Foods Market, this means seriously considering each expense and its necessity in your life.  Do you need cable TV? Do you need your expensive car? If that doesn’t save enough money, go further. Sell your house and move into a smaller one or move in with family. In other words, be willing to make sacrifices.

2) Work with creditors to settle your debts – Creditors, especially large ones, settle debt all the time.  If you make your situation clear, they will often be willing to settle with you, because from their perspective, getting some money is better than getting none at all.

3) Increase your income – This is another one that seems obvious, but is rarely tried. Considering the negative consequences of bankruptcy, taking a night job at McDonald’s for a few months may be the better option if it will help you pay down your bills more quickly.

These actions require hard work and humility, but if the end result is avoiding bankruptcy, it is worth it. Besides having avoided the negative consequences of bankruptcy, you will gain the satisfaction of knowing that you paid off your debts yourself.