If you find yourself with an uncontrollable amount of debt on your hands with no real way out, you still have to fight your hardest to avoid bankruptcy. Sure, it seems like an easy solution, but you will end up regretting it and your life will change forever. Even though your credit score will eventually return to normal if you are responsible with your money, it still takes a lot of time and caused a lot of stress on all parties involved.

So, in reality, claiming bankruptcy does not damage your credit score forever, but it will for a pretty long period of time and it is a stressful situation that no one wants to go through. The best piece of advice? Do all you can to avoid declaring bankruptcy. Keep an eye on your debt and get rid of problems before they become uncontrollable. When you declare bankruptcy, you lose a large part of your life, and you can never get that back.

Make A Budget
You should always adhere to a budget – its just responsible. By having a budget, you will know how much you have to spend and where all your money comes from and goes. It doesn’t take that long to create a budget, and it will help you reach your financial goals as well as keeping out of debt!

Watch Your Accounts
It is amazing how many people don’t keep track of all their accounts. It can get confusing sometimes, but this is when people start to get out of control and make mistakes. Make a conscious effort to watch all your accounts and record the money you spend. It will help a lot in the long run.

Save Money
It is always a good idea to save as much money as you can. You never know when a major expense will come up. If you have a pretty nice nest egg built up, you will have no trouble dealing with these and you will be able to navigate your problems without taking on a loan.

If you follow the above three steps, you will have no problem staying out of debt and reaching all your financial goals!

Be Calm
It is a common response when a debt collector calls to become agitated and uneasy, especially when they are very aggressive. You have to stay calm and keep a cool head. Getting all worked up over something like this will do no good and it doesn’t help you accomplish any of your goals.

Don’t Overreact
Likewise, some people overreact when the get a phone call from a debt collector. They start getting defensive, the get rude, and even start threatening the collector. This is childish and should be avoided at all costs. You are an adult, so act like one. Yelling and swearing will not get you out of this mess.

Know Your Rights
Finally, it is very important to know all your rights as a UK citizen. Most debt collectors know you don’t know all your rights, and they will take advantage of you because of this. When you take on any debt, make sure you know all your rights and are prepared to exercise them when the debt collectors come knocking.

If you know how to deal with aggressive debt collectors, you will have a much easier experience and will avoid a whole lot of undue stress. Stay cool and act accordingly.

Rapidly Increasing Credit Card Debt
The first sign that your debt is getting out of control is when your credit card balance skyrockets. Even if you slip up once or twice, you can run into credit card problems real fast, and the high interest rates can be a killer. Keep a special eye on your credit card debt.

Trouble Making Minimum Payments
When you are just struggling to make the minimum payments on your credit cards of loans, your debt is out of control. When you make the minimum payment, most of your money is going to service the interest and very little is being used to pay down the principle. This is a recipe for disaster.

Losing Track
When you are losing track of your spending and don’t know where all of your money is going, there is a good chance that your debt is already, or soon will be, out of control. Most people spend faster than they can think, and this is a sure fire way to financial ruin.

You always need to be on the lookout for potential issues with concerns to your debt. You need to be proactive and not reactive. Chances are, when the debt collector’s start calling, it is too late.

Luxury Items
Never go into debt so you can purchase a luxury item when a similar, less expensive item will do. Cars are a great example of this. People love fancy cars, but they could make due with a cheaper car and not go into debt. On top of all this, luxury items are usually depreciating assets, so you are just throwing money away.

Vacations
For some reason, people love to take out loans to go on yearly vacations. Why bother, though? Sure, a week away with your family is nice, but is it worth making payments for the rest of the year? Only go on vacations when you can afford it – taking out a loan for this is the wrong approach.

Social Habits
You should never take out a loan to continue perpetuating your social lifestyle. Believe it or not, some people take out loans so they can continue to go to the bar and hang out with their friends instead of cutting back. This is clearly a very poor idea, and in the end you really get nothing out of it.

Sometimes, going into debt is unavoidable. But, going into debt over some of the aforementioned things is just silly and will really hurt you financially with no real return.

The general consensus on this subject is to not take on any debt until you absolutely have to. What exactly does this mean, though?

If you are 19 years old, you don’t need a brand new car that costs a lot of money. You can get away with saving for a while and paying cash for a used car. Sure, it may not look as nice, but being debt free is more than enough to make up for it.

There is an exception to this rule though – houses and condos. You see, you have to live somewhere when you move out of your parent’s house. When you are renting a place, you are effectively throwing money away – you are not building and equity. So, as soon as you can afford it, you should consider taking out a home loan and buying your own place. This way, you are building up your assets and not throwing money away.

With the exception of a home, you want to stay out of debt for as long as possible. As soon as you start acquiring debt, it usually starts to snowball out of control and will cause problems down the road.