Personal Injury Lawyer
There are a lot of steps you can take to manage and even eliminate your debt before filing for bankruptcy.
Whether it’s a little bit of debt or a lot, it can be easy to just turn a blind eye rather than face real financial consequences. Do not do this! The best way to manage your debt is to be knowledgeable about it, so get organized. Know how much you owe and to whom. Make a spreadsheet and for each debt list the following:
- The creditor
- The total amount of debt
- The monthly payment
- The due date
If you are feeling overwhelmed by this task, just take a look at your credit report. It will do the majority of this work for you. Update your list every few months as the total amount of your debt fluctuates.
Next, make a budget and pay your bills on time each month. Decide which debts to pay off first and make more than the minimum payment if possible. You can only pay as much on your debt as you can afford. If, after getting organized, you find it hard to pay all or some of your bills each month, consider debt relief.
It goes by many names: debt relief, debt settlement, debt reduction, debt negotiation, debt resolution, etc. But debt relief applies only to unsecured debt, which is a debt that is not secured by collateral, like credit cards and certain types of loans.
Settlements are negotiated with the creditors in an attempt to lower the amount of debt due. Once an agreement is met, the terms of the debt relief are put into a contract. Often, the creditor will forgive a large part of the debt in return for a one lump-sum payment in exchange for the debt to be considered cancelled and the matter closed.
If you find yourself owing more money to creditors than you have, or can foreseeably earn, it may be time to consider bankruptcy.
Chapter 7 is the most commonly filed bankruptcy amongst individuals. The assets you own will be liquidated and used to pay off your debts. After that, the bankruptcy is usually dismissed. Chapter 7 is often referred to as a “fresh start.”
If you don’t qualify for a Chapter 7, you may be eligible for a Chapter 13, also known as the “wage earner” bankruptcy, because you must have a reliable source of income to file for it. Your finances are reorganized into a plan that allows you to pay back creditors over three to five years while maintaining control and ownership of your assets.
Hire a Lawyer
Hiring a lawyer to assist you is one of the most important steps in successfully settling a debt, filing for bankruptcy, and avoiding legal consequences. If you are interested in learning more about debt relief, contact an experienced lawyer for a free initial consultation.