In addition to planning for the future, avoiding bankruptcy is a cornerstone of personal finance. The financial decisions you make will determine whether you will earn a comfortable living or need a bailout in the form of a bankruptcy filing. There are a number of effective ways to avoid filing.

First, research all the options available before filing chapter 7 bankruptcy. You’d be surprised the lengths to which creditors are willing to work with you when you make a good faith effort to catch up on delinquent bills. Especially if something short-term, like a job loss or injury, is causing you to default on your bills. Don’t let a short-term problem result in a longer term problem like bankruptcy.

Second, look into consolidating your debt instead of just making minimum payments on what you owe. Rolling a number of debts into one new loan can not only help to organize your debt, it could also result in a new interest rate that will save you money in the long run. A single loan also reduces the likelihood of forgetting to make payments or letting debts slip through the cracks.

Third, one of the best ways to avoid bankruptcy is to make necessary lifestyle changes. If life’s little extras, such as a morning coffee or beers with co-workers, end up being extras you can’t comfortably afford, then it’s time to forego these unnecessary items. A reduction in the cable TV plan or selling one of the family cars is another way to adjust your lifestyle to save more money in the long run.

Lastly, debt deferment is key to avoiding bankruptcy. Make arrangements with your creditors to pay your bills at a later date, thus avoiding an impending bankruptcy.