No matter what your current financial situation you are currently in, it is important for everyone to understand how to avoid bankruptcy and make financially smart decisions to keep your good credit and maintain a sense of financial stability for the long term. Bankruptcy can have long term and harmful effects on your financial history and credit reports. Bankruptcy is not a path that you have to take; there are many alternatives and steps you can take before you find yourself faced with bankruptcy notices or foreclosures.The first sign that you may be heading towards the road of bankruptcy is when you begin to lose sight of your regular payments and find yourself behind in more than one payment and have more debt to pay than income to support this debt. These are the signs of not only bad credit but out of control spending that can lead you to bankruptcy if you do not stop this cycle before it is too late. The only way to really see what type of financial situation you are in is to take a blank sheet of paper and write your monthly debts and expenses on one side of the paper and your income and assets on the other side of the paper. This way you can see just how much trouble you are in.From this assessment you should be able to see some of the mistakes you are making with your money and make the appropriate changes in order to get your finances back on track. This can sometimes be hard to honestly take a look at your spending and not only see the mistakes but take the action to correct them. Most often the problem is that you are spending your money paying off the minimum monthly payments and using your excess money to only purchase more items that you cannot afford. This can become not only a vicious cycle but a habit that can be hard to break.If you find that you do see mistakes in your finances but are not sure how to go about making the changes before you have creditors contacting you and bankruptcy notices coming your way, there are many financial professionals who can help you stop this spiral if you have caught the problem early enough. Just as with any situation once it reaches a certain point there is no way to turn it around. You want to take care of your credit problems before you are months of payments behind and before you lose your credit and even your home. These are the events that initiate the bankruptcy process as many people lose hope and faith in themselves and this type of negative thinking only harms their situation that much further.Understanding that bankruptcy is something you can avoid is the news everyone wants to hear when you are suffering from financial problems that you think cannot be avoided. Visit your trusted financial advisor or lender today for assistance to get your bills and debt back into order.