Bankruptcy

Dealing with Debt Before Bankruptcy

By
David F. Mills
on
March 23, 2021

If despite your best efforts you weren't able to keep up with your payments, then you can reach out to one of our bankruptcy attorneys. We will guide you through the legal process and help you choose the best option for your needs and financial situation.

Credit has increased Americans' purchasing power, making it possible for them to pay for higher education, access medical care, and buy homes, cars, and other goods. At the same time, borrowing money has also normalized debt. Most Americans are carrying an average personal debt of $92,727, show the latest reports.

Whether your debt struggles are caused by an illness, unemployment, or the Covid pandemic, filing for bankruptcy may seem like a good way to fix your financial troubles.

Bankruptcy is a legal process under which you are declared unable to pay your debt and are released from your financial obligations. When you file for bankruptcy, any legal actions against you are put on a halt. While it can be the breath of fresh air you need and the opportunity to start new, filing for bankruptcy won't make your financial problems disappear.

Before you call a Smithfield bankruptcy attorney and file for insolvency, consider these methods of dealing with debt.

Lower Your Living Expenses

Take a close look at your monthly expenses and see if there are any changes you can make without drastically affecting your lifestyle. If you are paying for two or more separated cell phone plans, see if you can combine your accounts into one. Change your cable plan or cancel it altogether if you don't use it as often. Cancel old memberships that you don't longer need or use.

Sell Some of Your Assets

If you realize that you won't be able to make payments this month, think of whatever you can sell and use the money to pay the creditors. This way, you avoid getting caught in a vicious circle where you are always behind on payments and bankruptcy becomes imminent.

It may be hard to sell your electronics, jewelry, or furniture, but try to think of it as a temporary drastic measure that will help you stay afloat during these difficult times. 

Debt Consolidation

After cutting your expenses and realizing that your debt is now manageable, you may consider reorganizing multiple bills with different interest rates, due dates, and payments. A debt consolidation plan can help you organize all your debt payments into one monthly bill. 

You could, for example, get a fixed-rate debt consolidation loan and use the money to pay your debt then pay the loan back in installments over a fixed period of time. 

Negotiating Payment Plans with Creditors

Contact your creditors and let them know that you are struggling financially at the moment, are willing to pay your debt, but want to avoid filing for bankruptcy. Most credit card companies and banks have hardship programs under which they will lower your payments or interest rate for a certain period to help take some of the burden off your shoulders.

Do You Need a Smithfield Bankruptcy Attorney

If despite your best efforts you weren't able to keep up with your payments, then you can reach out to one of our bankruptcy attorneys. We will guide you through the legal process and help you choose the best option for your needs and financial situation.

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