Debt can affect the quality of your life and often lead you to bankruptcy. Dealing with bankruptcy can be an overwhelming experience. Sometimes, you have to file Chapter 13 or Chapter 7 bankruptcy. In this situation, you will need an experienced attorney like San Diego bankruptcy lawyer. An attorney can offer the best alternatives to save you from insolvency.
To file bankruptcy, it is essential to explore different alternatives. After completing the process, it will be easy for you to rebuild your credit score. Here are some suggestions for you.
Sell a Few Assets
Sell every spare asset so that you can pay off some debts. Immediately take action when you notice your insolvency to make payments. Remember, if creditors catch you, you will not be able to take further actions. Check your valuables, such as electronics, jewelry, and furniture. You can sell them on an online platform or start a yard sale.
Some people may not find it convenient to live without these things. Try to adjust yourself because this problem is temporary. After avoiding bankruptcy, you will be able to save money to repurchase these things.
Find Ways to Pay Debt
If you can’t pay off the debts for a specific period, you have to file Chapter 13 bankruptcy or Chapter 7. Pay attention to your budget and cut unnecessary expenses. For instance, you can decrease the use of cell phones, landline, and satellite or cable television. It will be easy for you to cut some expenses without pain.
If you are living on bare bones-budget, try to increase your income by working part-time or overtime. Skills and hobbies may help you to get extra money. In this way, you can avoid bankruptcy.
Ask Help from Creditors
Your creditors will like to have some money from you instead of no money. Feel free to share your financial difficulties with your creditors. Sometimes, creditors can help you to deal with financial problems. Express your readiness to pay a debt and ask their help to decrease the burden by decreasing the monthly payments. Moreover, you can ask them to reduce the interest rate. Several credit card banks and companies may offer hardship programs.
Before taking any hardship program, make sure to decrease your interest rate and monthly payment. Remember, higher payment can make it difficult to pay off your loan.
Seek Credit Counseling
It is not easy to deal with the creditors. If you find it difficult to deal with creditors, you should take help from professionals. Find an experienced credit counselor so that you can get benefits of low-interest rate and payment. The bankruptcy law needs credit counseling before the bankruptcy filing. It is important to consider credit counseling as a substitute for bankruptcy. The credit counselor may work with your creditors to prepare a plan for debt management. Under this plan, you have to repay your debt over 3 – 5 years. A counselor may adjust affordable payments to make your life easy.
Assistance from Friends and Family
Borrowing money from friends and family can be a bad idea. It can increase difficulties in your relations. To avoid bankruptcy, you can ask for assistance from friends and family members. Carefully calculate how much amount you will need to avoid bankruptcy. You must understand the available cash for possible contribution to debt.
Sometimes, friends and family members are ready for your assistance. Before approaching them, you should create a plan and explain to them how you may repay them.
Settle with Debt Collectors and Creditors
Debt settlement can be avoided under normal circumstances. The edge of bankruptcy is not normal. If you want to select between filing bankruptcy and settling some debts, try to settle the debts. It is essential to plan everything in a better way.
You must not use a debt settlement organization. Extra money and excessive time are necessary for these companies. Moreover, avoid settling any debt with current payments. Consistently make minimum payments on existing debts to keep them in good condition. Pay attention to already charged off debts. Prepare yourself to pay a lump sum amount for settlement after an agreement.
To avoid bankruptcy, you can try all these measures. Try to avoid bankruptcy by selling some assets. Increase your savings and make deals with your creditors.
Tips to Save Money to Avoid Bankruptcy
If you want to avoid bankruptcy, it is essential to increase your savings. Start your savings with a budget. Here are some tips for you.
Create Your Budget
If you want to avoid bankruptcy, depend on a monthly budget. Calculate your monthly expenses by writing down the list of monthly expenditures. Check your debit card and credit card statement for the last six months. Typical expenses include food, utilities, mortgage or rent, insurance, health care, childcare expenses, transportation, and debt payments.
After calculating expenses, you have to increase your monthly income. Note down all sources, such as alimony payments, payments for child support, disability benefits, commissions and bonuses, tips, salary, or wages.
Cut Irrelevant Expenses
You will need some money to deal with monthly expenses and to pay off debt. It can be challenging to lower down fixed expenditure, such as health insurance premiums, car payment, and rent payment. However, a cost that is not a necessity can be redirected for the repayment of debt. Try to cut certain expenses, cable television, landline phone, cigarettes and alcohol, subscriptions to Netflix or magazines, gym memberships, high-speed internet, visits to spa and vacations.
A credit counselor can help you with budget payment. They will access your debt and create a budget for you. Before filing for bankruptcy, you will need credit counseling. To find a reliable credit counselor, you can visit housing authorities, universities, and credit unions. After creating your budget, you have to take its print out to carry it easily with you.
Increase Your Income
After cutting some expenses, you have to increase your income. Sometimes, it will be useful to start a part-time job. Try to increase monthly income with freelancing jobs. For instance, you can edit or write articles in free time.
Moreover, you can run a bakery or catering business if you are specialized in desserts. An extra job can make it easy for you to repay taxes. To decrease your expenses, stop the use of credit cards, and always use cash for payment.
Sell Extra Possessions
Are you habitual to buy unnecessary things? In this situation, you can’t pay off your debt. Stay away from wrong habits that can increase your debt. Carefully evaluate your possessions to find out if you have something additional. Sell these items to get money in a garage or yard sale. Feel free to sell small goods, such as CDs and books.
Consolidate Debt Payments
Sometimes, you can consolidate your debt payments with a personal loan. With this loan, you can pay off additional debt. Now, you will deal with a monthly payment with a low-interest rate. Visit credit union or bank to get personal loans. Ask about repayment periods and interest rates before taking a loan.
Try to get loans without prepayment penalties. It may help you to pay off loans at a faster rate and decrease your debt. Feel free to check online lenders specialized in personal loans. They may help you in debt consolidation. Numerous scammers are working on the internet. You must not borrow from lenders that don’t have any concern with your credit score. Avoid lenders that require you to pay advance fees.
You can get the benefits of balance transfer for a small fee, such as 4% of the actual balance. It is possible to transfer debt from a card to another. Sometimes, you can escape interest payment for a specific period. Try to transfer to a card without balance. The balance on a card may accrue interest. With good credit, you can get the benefits of your new credit card. The cards may offer a period of 12 to 18 months without interest.
Take Out a HELOC (Home Equity Line of Credit)
If you don’t need a personal loan, you might need a HELOC. The home equity line of credit offered for an affordable interest rate. It is easy to spread out your payment over a long duration. A personal loan can be better than HELOC because it is unsecured. If you don’t file for bankruptcy, try to wipe out your debt in Chapter 7. A bank can keep lien with a home equity line of credit.
Avoid unnecessary expenses to consolidate your debt. You must have breathing room by decrease your expenditures. Create a budget to consolidate your debt. Funnel your excessive money for payment of the debt.
Refinance or restructure your mortgage. After filing bankruptcy, you could lose a home. If your largest expense is a mortgage, you must try to refinance or restructure it. In this way, you can avoid bankruptcy. Moreover, contact your lender for information. Recasting may help you to restructure a mortgage. Sometimes, you can stretch out the duration of the mortgage from 30 – 40 years.