Managing debt can be a daunting task, especially when dealing with high-interest loans and credit card balances. However, there are steps you can take to reduce the risk of bankruptcy and get back on track financially.

Creating a budget is the first step in managing debt and reducing the chance of bankruptcy. Start by tracking your income and expenses for a month to get a clear picture of where your money is going. Then, identify areas where you can cut back and allocate that money towards debt repayment.

Paying off high-interest debts is crucial in reducing the risk of bankruptcy. Focus on paying off credit cards with high interest rates first, followed by personal loans and mortgages. Consider consolidating debt into a lower-interest loan or balance transfer credit card.

Avoiding financial pitfalls is also essential in managing debt and reducing the chance of bankruptcy. This includes avoiding lifestyle inflation, building an emergency fund, and being cautious with investments.