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Last time, we briefly discussed what the Bible says about borrowing money and then we discussed a definition of bankruptcy, along with a Christian perspective of what bankruptcy looks like. Just like many individuals and couples that we meet when we serve a local church with Life Institute’s Stewardship Lifestyle Seminar, some of you listening right now may be nervous about your personal debt, and are wondering how to avoid going down the path of bankruptcy. In this episode, we are going to give you some steps that you can start to implement today that can help you avoid bankruptcy tomorrow.

If you are headed towards bankruptcy, what do you do?


How to Avoid Bankruptcy

  • FIRST and MOST IMPORTANT THING: Stop Borrowing. Avoid all new debt! If you never want to go through bankruptcy, don’t borrow. That may not be realistic for everyone. So, if you have debt, you HAVE TO live reasonably! Make sure that when you borrow, there is always a guaranteed way to repay. Don’t borrow on a whim or a hope that you could pay it back someday. You need to KNOW that you can repay your debt. Debt is not your friend. It is a tool that could cut you deep if you don’t use it carefully.
  • Tell your dollars where to go. Live on a bare-bones no-frills budget. Episodes #16 and #17 can walk you through creating a budget that actually works! See ALL Episodes dealing with debt here.
  • Get rid of the credit cards and operate with cash.
  • Work your debt snowball.
  • Liquidate unneeded assets/luxuries. Sell unneeded items such as tools, clothes, toys, etc…
  • Reduce (or eliminate) ALL expenses, except what is needed to survive. Simple food, basic utilities, shelter, and transportation are the only things you should be spending money on.  
  • Get a second (or third) job to Increase income.
  • Build an emergency fund so you don’t go further into debt when emergencies arise. A credit card is not an emergency fund!
  • Negotiate with creditors: If you’re having trouble making payments, reach out to your creditors to discuss alternative payment arrangements or debt restructuring. They may be willing to work with you to find a solution that avoids bankruptcy.
  • Be aware of debt consolidation companies that may seek to prey on your vulnerable situation.
  • Educate yourself: Take the time to educate yourself about personal finance and money management. Understanding concepts such as budgeting, saving, investing, and debt management THROUGH A BIBLICAL WORLDVIEW can empower you to make current and future informed financial decisions that will move you forward and honor the Lord at the same time!
  • Give to the Lord’s work! Proverbs 3:9–10 – “Honor the LORD with your wealth, with the firstfruits of all your crops; then your barns will be filled to overflowing, and your vats will brim over with new wine.”
  • Talk to an expert prior to declaring bankruptcy to examine every option. It is okay to get help and talk to someone! Ramsey Solutions has financial coaches who can talk to you, and our team can help you as well through our free Personal Stewardship Reviews.
  • Seek accountability!  A good Christian friend, Pastor, Elder or someone that will ask you the tough questions as you strive to move in the right direction!


Lean into the Lord

  • Acknowledge the choices and behavior patterns that got you into this situation.
  • Confession and repentance most likely will be in order. 
    • You need to confess to God your poor stewardship choices and make this your first place to go to!
    • Also, you should seek out those impacted by your choices and actions (friends, family, spouse, lenders…) and speak to them.
  • Pray!
    • Pray for God to make it possible for you to repay. Seek earnestly the Lord’s favor.
    • Pray daily…and many times a day!
    • If married, pray with your spouse about this…regularly, if not daily!
  • Ask the Lord to be in your new forward progress.
    • Ask the Lord for additional work…and when it comes, work hard and unto the Lord (Col. 3:23 – Whatever you do, work at it with all your heart, as working for the Lord, not for men)
    • Grind everyday…all the while trusting the Lord to provide for your needs. 
  • Ask the Lord for wisdom from this day forward!
    • James 1:5–6 – If any of you lacks wisdom, he should ask God, who gives generously to all without finding fault, and it will be given to him. But when he asks, he must believe and not doubt, because he who doubts is like a wave of the sea, blown and tossed by the wind.


Stewardship Application

Some simple, yet difficult steps will propel the individual/couple/family that is struggling financially and wanting to avoid bankruptcy into the right direction. There will be a “new normal” for you from this day forward. But all this cannot be accomplished in a lasting way without the work of the Lord in and through you and the wisdom of His Word and His people speaking into you.

Are you in this predicament?  Do you know someone that has been continually struggling financially? It is time to make a change, and with the Lord invited and involved in the repayment and restoration process, a journey of new stewardship and trust in the Lord will be your soon-to-be testimony!


Next Steps


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The topics discussed in this podcast are for general information only and are not intended to provide specific investment advice or recommendations.  Investing and investment strategies involve risk including the potential loss of principal. Past performance is not a guarantee of future results.

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