It could be the loss of your job or large medical bills. It could be that you just lost track of your spending, but you’re in debt. You’re deep enough in debt so that you’re having a hard time seeing any light at the end of the tunnel. Here are some ways you might be able to avoid bankruptcy and what you should do if you can’t decide or can’t avoid going to court.
Protect the Necessities
Start by taking care of the now. You need to protect the basic needs in your life. Your rent or mortgage payment needs to be kept up to date. You need to be able to feed yourself and your family. You need to keep the utilities turned on and have transportation – whether it’s your car or a bus pass. Those things have to come first. You don’t want to lose your home because you’re behind in your credit card debit. Pay those bills first – before any creditor scares you into making a payment that would make it impossible to meet your basic needs.
Steps to Help You Avoid Bankruptcy
If you want to climb out of your debt hole, you’re going to have to make some changes and work with your creditors. Here are some of the things you should consider. They may make it possible to avoid bankruptcy.
1. Sell What You Don’t Need. First, take a look at the big things. Do you have a second car that’s old but paid for in full? Do you have property – even if it’s the lot where you wanted to build you dream home? Now, dig deeper. A yard sale may be able to make your car payment. Those books and CD’s, the appliances you don’t really need, your TV – or TVs, and your tools that aren’t needed for your employment will all bring in money. If you think it’s a way out, don’t stop there. Think about selling some of your furniture, your office supplies and even the toys the children no longer need. This may sound very unpleasant and like a drastic step – it is. But, filing bankruptcy may be more unpleasant and drastic. When your finances turn around, you can replace things. If you declare bankruptcy, it’s going to take time to restore your good credit.
2. Talk to Your Creditors. It may seem counterintuitive, but start with debts that have already been turned over to collection. See if they will agree to a settlement. They may have already given up on recouping any money and be ready to offer a settlement. If you agree to a settlement, remember you have to be able to meet those terms whether it’s a smaller, lump sum payment or a reduced monthly payment. Companies want to be paid so they are likely to work with you. They may delay interest. They could agree to a lower payment. They may even write off part of what you owe. It’s best to do this yourself, but you can use a debt consolidation company that will combine all your debts into one – usually with a lower payment. But, know you’re going to pay for those services, so this is an instance where do-it-yourself may be a better answer.
3. Cut Your Budget. You really can live without cable – even if you can’t wait for the next installment of Game of Thorns. You can pack a lunch and forgo the weekend dinner out – or dinner out on any other night. Forget the movie theater. You’re going to have to do without and it’s going to be hard to scale back your standard of living, but if it offers you a window to avoid bankruptcy, do it.
4. Ask for Help. It will hurt your pride, but if you have family members or friends who have the financial ability to help you, ask! Talk to them, but be ready. Be able to tell them what you can contribute on your own and how you intend to repay them.
None of the Above
If the steps listed above aren’t enough to give you the opportunity to get back on your feet or if you’re still not sure what to do, it’s time to talk to an experienced bankruptcy attorney, whether you live in Gilbert, AZ or Florida. Most bankruptcy lawyers will offer you a free initial meeting. Go to that meeting prepared to share all your financial information. A good attorney will listen and answer your questions – including if you should file and which type of bankruptcy would be best for you. Ask about a flat fee or how the attorney will charge and how he will work with you. Bankruptcy was designed to give you a fresh start. If it’s the best answer for you, talk to that bankruptcy attorney and get the help you need.