Top 10 Ways to Avoid
Bankruptcy

If you ultimately file bankruptcy, it is not only you who is affected. Your creditors are, too. Credit card debt is often discharged in bankruptcy. If your creditors know you are considering bankruptcy, they might be more willing to negotiate with you now before it’s too late. They may agree to:

It's also important to be aware of your rights as a consumer when it comes to debt collection. If a creditor has been harassing you or violated your rights, you could sue them. Our debt collection attorneys can help advise you, if you have questions about the Fair Debt Collection Practices

Getting some extra cash flowing into your household can give you some additional resources to use to pay off debt. Consider:

You need to know exactly how much money you are bringing in and how you are spending it. Make a written budget that plans how you use every dollar before you get it. When making your budget, dedicate as much money as possible each month to paying down debt.

About four in ten U.S. adults would have to borrow money if they were hit with a $1,000 emergency, according to a Bankrate survey. Doing so just pushes you more into debt. Most people are unprepared for a major financial setback, such as job loss, a decline in business, illness, or disability. Consider what you would do in case of an emergency and plan ahead for it.

The source of your debt may be in your home. You can regain control over it by selling items like:

One of the most important ways to prevent bankruptcy is to reduce your spending. You need to free up cash to pay off debt and save. Explore all options to reduce your spending, including:

Debt consolidation companies promise to take all your debt and consolidate it into a single “low interest” loan. First of all, often these low interest rates are teaser rates that go up after the teaser period is over. Not only that these loans often are for a longer extended period of time. Meaning you often wind up staying in debt much longer with these loans, and wind up paying more money in the end and having your credit ruined for an even longer time!

For starters, debt consolidation companies charge you a fortune, anywhere from 15-25% of the debt amount. Not only that, but they set up your payment schedule so that they don’t even start paying your creditors until they have gotten all of their money upfront. Meaning you could spend 6 months to a year making payments that go completely to the debt settlement company before a single bill of yours gets paid.

On top of it all, debt settlement companies aren’t lawyers, so if you get sued during the process they won’t be able to help you and will make all kinds of excuses like “oh the company that sued you didn’t want to work with us.”

Many of these companies aren’t even legitimate and wind up taking your money without delivering results, and by the time you realize it they have shut down and opened up somewhere else under a different name. There is a reason why debt consolidation companies continue to rank as the top consumer complaints by the FTC. If a debt settlement company wants you to pay them directly instead of your credit cards STAY AWAY! You’ll wind up either being taken advantage of or completely scammed.

Proactively planning where your money will go can sometimes create an incentive for more structured spending. Set financial goals that consider your values and hopes for the future.

Even if you do not want to file bankruptcy, you can still contact a bankruptcy attorney to learn more about your options. At Loan Lawyers, we try to truly find the best financial solution for our clients, whether that is bankruptcy or other solutions, like loan modification or going to trial. We often employ options instead of bankruptcy such as credit card defense or foreclosure defense to protect our clients. Contact us today to learn more about how we can help.