We’ve already mentioned that bankruptcy should be
undertaken only as a last resort, when all other ways to settle your debts have
failed. Consider these alternatives:
Make a budget. If you are used to spending away your money each payday on
whatever catches your fancy, it’s time to stop that now. List down all your
sources of income in one column, your fixed expenses (food, shelter, education,
car payments, and the like) in another, and your other expenses (leisure,
vacation, and the like) in another. Write even the most insignificant purchases
as these have the tendency to add up. When you do, you will be able to spot
where you are spending needlessly. With a budget, you are in a better position
to manage your funds.
Call your creditors. Most creditors are amenable to
restructuring your loans with them if you show the initiative to contact them
about your delinquent accounts. Explain why you are having difficulties but
that you can afford to pay a certain amount per month to settle your debts
until such time that your finances get better. Make sure that you do this
before your debt becomes 120 days delinquent, though, as your account will most
likely be turned over to a debt collector. Dealing with collection agencies is
much more complicated.
Settle your debts. Contact your creditors and offer to
settle your debts. Do debt settlement on your own and don’t rely on debt negotiation
companies to do this for you. Many have successfully negotiated their debts for
as low as 20 to 30 cents on the dollar and have written books about it. Learn
from them.
Sell some stuff. If buying designer clothes, bags, and shoes got you in this mess
and you have a closet full of stuff you don’t anymore use, have a garage sale.
Turn any asset you have into cash which will help pay off some of your debts.
Look around for stuff in the house you can sell on eBay. Not only will selling
things you don’t anymore need generate money to get you through this
financially troubling time, you will also realize how owning fewer things gives
you more freedom physically, emotionally, and spiritually.
Be frugal. Living below ones means is a trait of many self-made
millionaires. You may be far from that road now but spending less than what you
make each month will give you extra funds that can go towards debt payments.
Besides, it’s also good practice to always have something extra left. Even when
you don’t have any more debts to pay and have already cultivated that habit of
being frugal, the excess amount left can be used for savings or investments.
Consolidate all your debts. If you can take out a home equity loan
and pay off all your credit card and other unsecured debts using the proceeds
you can get from it, you will only concentrate on paying off one loan. However,
this would mean that you are turning your unsecured loans into a secured one
with your house on the line. If you fail to pay, foreclosure is possible. Talk
with a lawyer or a financial adviser before consolidating your debts.
Go for credit counseling. If you simply want advice on how to
manage your finances, a credit counselor can help. Some will even help
negotiate your debts for you. However, it’s best to do the negotiations on your
own with the lessons you have learned from your counseling sessions.
As you can see, there are many alternatives. Exhaust all
these strategies first before ultimately filing for bankruptcy.
Find more articles on debt
management by just clicking
on this link: http://consolidatedebtguide.org/
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