Young families who face bankruptcy have a lot to consider. They must think about providing for their children, even when debt gets in the way of buying their kids necessities. These young parents also need to think about setting themselves up for retirement down the road. Understandably, they feel concerned about filing bankruptcy in light of all of this. However, there are some things these young families can do to get out of debt. Here are five of them.

1. Take an Assessment

To get out of debt and avoid bankruptcy, you first need to know how much debt you have versus the money you have coming in. You also need to keep track of your expenses. For example, many people don’t really think about that $5 cup of coffee they get on their way to work each day, but these expenditures can add up. That $120 or so that they spend on coffee can be put toward debt. The first step, then, is knowing what you have and where your money goes.

2. Get Rid of Some Assets

Once you have done your financial assessment, you’ll want to determine if there is something of yours that you can sell to earn some money to put toward debt. Depending on how dire your situation, you may have to cut rather deep. Dave Ramsey ONLY recommends cashing out an IRA or 401k in order to avoid bankruptcies and foreclosures. “Sell so much stuff,” Dave says, “that the dog thinks he’s next.” You may own items like a baseball card collection, some antiques, or even a second car that no one drives. If you have assets that you can sell, then sell them. Put that money toward your debt.

3. Find Extra Income

How A Young Family Can Avoid A Bankruptcy

Is it possible for you to earn money by getting a weekend job or by taking on some freelance clients? You may not need to work much, but even an extra shift at the local diner a couple of times a week can help. If you figure that you’ll make $40 or $50 a day and you work two extra days a week, that’s nearly $200 extra you can put toward your debt. Delivering pizzas on nights and weekends can give you around $1000 a month of extra margin. Find something. Find anything. Now is the time to get intense.

4. Contact Your Creditors

Many older accounts are probably in collections at this point. What you need to remember about collectors is that they are mean, nasty, incompetent, abusive individuals that break federal law all the time in order to threaten you and scare you into getting money. The other thing to remember is that they’re not expecting to get any money out of you, so if you offer them a settlement and persist with them long enough, they’ll probably take it. According to WantaFreshStart, you should never send these vermin any money until you have written confirmation that they have accepted the terms of the settlement. Further, you should pay them in cash, or not at all. Under no circumstances should you ever provide them electronic access to your checking account.

How A Young Family Can Avoid A Bankruptcy

Many creditors or collectors will threaten to sue you. That’s fine. They can sue you and they’re going to win. Chances are that if you’re staring down the barrel of a bankruptcy, you don’t have many assets left that they can collect on, so a judgement against you will be effectively impotent. Save up what money you can to pay off outstanding debt, and then hold on to it until you can convince someone to take it. You may have to remind them that they can have your $2,000 or they can have nothing – that’s up to them.

5. Think About Other Options

There are some instances that really do prohibit you from avoiding a bankruptcy, a serious illness, for example. If there really is no way to avoid bankruptcy, in most cases, it’s better to start it sooner rather than later. This allows young families to work on their post-bankruptcy financial recovery more quickly. This, in turn, opens the space for them to start saving money for retirement and other important milestones.

Facing bankruptcy feels overwhelming, at times, it even feels humiliating. However, it also doesn’t have to come to pass. Families who face bankruptcy should attempt to get their financial ducks in a row before talking to an attorney. However, if bankruptcy seems inevitable, it’s better to get it done and over with so that these young families can start anew.