If you are drowning in debt and can’t pay your bills, you need to act quickly to rebuild your credit. You have a number of solutions available, with bankruptcy as a last resort. If you don’t think filing for bankruptcy is the right move for you at this time, here are a few things you can do to try and catch up on your debt.
List Your Debts
Get a copy of your credit report, that report will name everyone you owe. List the total debt owed to each creditor along with the interest rate. Include the monthly minimum payment. Some financial advisers recommend paying off the smallest debts first, since it builds momentum and motivation. But mathematically, it makes more sense to attack debts with higher interest rates.
Contact Your Creditors
Many creditors have leniency programs for job loss, medical emergencies, death or extended illness in the family, etc. If you’ve experienced a financial hardship, contact the creditor to see if you qualify for a lower interest rate. You should also consider transferring your debt to another credit card offering 0% interest. But read the fine print. The 0% rate usually jumps significantly after 6-12 months, so be sure you can pay off the debt in that time frame. And calculate the initial transfer fee to make sure you’ll be saving money.
Make A Budget
Add up your housing, transportation, utilities, groceries, child care and other fixed costs. Find out how much take-home pay you have left to throw at your debt each month. If there’s not any, try to find some. Do you need the full-service cable plan? Can you eat out less? Can you exercise at home instead of paying for a gym membership? You should also try to increase your income. Work overtime if you can or pick up a second job.
Pay Down Your Debt
Once you know your expenses vs. income, figure out how long it will take to get out of debt. If it’s longer than five years, you may to consider filing for bankruptcy. Track your progress on a monthly basis. If you get a tax return, inheritance or other windfall, don’t waste it on new materialistic purchases. Use it to pay down your existing debt instead. Credit cards can feel like free money, so use the real stuff instead. Research shows that people who buy things with their hard-earned cash typically spend less than they did using credit cards.
If the above tips aren’t applicable to your situation and you think bankruptcy is the right move for you, we’d love to help. To schedule a no-obligation visit with an attorney at any of our offices, please call (800) 978-4788 or fill out an appointment request online. The law is there to help you… and so are we!