Factors that can cause financial distress vary widely, and more often than not forces beyond your control can push you into a financial vicious cycle. Whatever the reasons that push you deeper and deeper into debt, there are proactive steps you can take to fight bankruptcy.

Learn financial management

Financial management classes should be taught along with reading and writing. Unfortunately they are not, and many of us are left without a basic knowledge of how to spend and save the money we earn. This is why it is important to take your own initiative and find out about either classes (many are offered for free) or teach yourself with publications and other writings on the subject.

Seek financial counseling

Do not wait to seek the help of professionals. Once you realize that your financial situation has spun out of control, do some research to find reputable credit counselors who can review your situation with you and help you customize a plan of attack for your needs.

Live within your means

One common reason for financial distress is a reduction of income for a number of different reasons such as a divorce, change in employment, illness, disability or job loss. If this is the case, you need to adjust your budget and spending habits to fit your new lifestyle. Scaling back is one of the most difficult steps you must take but it is an essential one to control debt and the possibility of having to file for bankruptcy.

Plan your career

Do not wait for your spouse to file for divorce or to be handed the pink slip at work. Plan your career and set goals for where you want to be in your career two, five and ten years from now. Having a goal makes you work harder and has you better prepared should the unexpected occur.

Divorce

A divorce can have devastating repercussions on your finances. If you are going through a divorce, be sure to cancel all joint credit cards and other checking accounts, especially joint accounts with overdraft protection. Also ensure that your name is on the title to your house and on all other investments accounts.

Know your rights

Knowledge is power. The more you know about your rights, the better and more effectively you can fight for your rights and avoid bankruptcy. In the event of a divorce for example, the IRS allows you to file an “innocent spouse” claim, if you believe you do not owe certain taxes.