Saturday, August 9, 2014, AM | 1 Comment
If you’re in financial stress, filing for bankruptcy might feel like your only option. Unfortunately, bankruptcy comes with many consequences and may not actually fix your problems. A bankruptcy trustee will be appointed to your case, with their main job being the maximization of repayment to your creditors.
You may even be required to make ongoing payments despite filing, and certain debts are not exempt at all.
Needless to say, filing for bankruptcy should always be a last resort, so before you do, try these six tips to recover.
This may seem obvious, but there are many superfluous costs that people struggling with money may not think to avoid. There are many luxuries we convince ourselves are necessities, like alcohol, cigarettes, or cable. Putting together a budget is the best way to give yourself an idea of how much you can and are spending each month.
Ditch Credit Cards
Cutting up your credit cards feels extremely stressful, but it may be necessary. You should try to subsist on an all-cash lifestyle; if you can’t afford it, you need to do more spending cuts. Many people live outside their means, viewing credit cards as free money– until the debt racks up.
Debt consolidation is the act of combining many short term payments into one longer term payment. This will lead to lower monthly payments, relieving some stress on your wallet on the day-to-day.
If you minimize your expenses and are still struggling, you need to look into maximizing your income. This means, if possible, getting a second or third job. It will be difficult, but may be a crucial step in avoiding bankruptcy.
With the advent of online banking, it’s easier than ever to see where and when your money is going. Keep track of your spending habits and identify any patterns you may not have noticed before. Logging your spending will concrete how much you have in your mind.
Contact a Professional
Credit counselors can negotiate with lenders to lower your interest rates, often up to 50%. They can also help create a personalized budget and debt management plan, a step many struggle to do alone.
You may be in a position where you feel so hopeless that bankruptcy seems like your only option, but it doesn’t have to be. It won’t be easy, but following these tips may help you avoid financial ruin.
Kara Masterson is a freelance writer from West Jordan, Utah. She graduated from the University of Utah and enjoys writing and spending time with her dog, Max. Information credited to AC Waring & Associates Inc., bankruptcy trustees in Edmonton.