At the Law Offices of Ronald I. Chorches, we specialize in bankruptcy law, but also understand bankruptcy is a last resort. In life things will happen that are out of our control that will negatively impact our finances. For example, if you are badly injured in an accident, and are unable to get compensation for medical expenses, many victims may find bankruptcy as a viable option for debt relief. If you are behind on your payments and feeling overwhelmed by your debt, here are four ideas to consider before choosing to file bankruptcy.
- Seek financial advice. Hiring a Certified Financial Planner can help if you are in a dire financial situation. At your consultation, you can provide them with detailed financial information, such as your income, debts, expenses, and tax documents but also discuss with them your goals–such as avoiding bankruptcy. These professionals may be able to help you develop a plan to get out of debt. If you cannot afford a Certified Financial Planner, you can also look into Chartered Financial Consultants. They have less education and therefore tend to be less expensive, but can still provide insight into your finances. If none of those options are available to you, you can consider free resources online or even ask friends or family you trust to give you advice.
- Make a detailed budget and cut out any unnecessary expenses. Go completely bare bones. While everyone’s definition of a necessity is different, things to consider cutting include restaurant (or even fast food) dining, new clothes, streaming services, and other subscriptions. You might even consider cheaper options for the things that are necessities. Perhaps opting to peel and chop groceries at home rather than purchasing the washed and ready options or buying cereal that is on sale rather than your favorite option. While these changes might seem small, they can add up over time and help you avoid accumulating more debt. Even if these lifestyle changes do not keep you from needing to declare bankruptcy, it will help you avoid bankruptcy in the future.
- Get creative! Cutting expenses alone will not get you out of debt. You need more income! Get creative about trying to supplement your income. Can you work overtime at work? Great! Sign up. Can you have a yard sale and sell some of your quality items? Do it! Are there parents in your neighborhood that need a night out? Babysit their kids! If you get creative, you will be able to find ways to make extra income. Anything from selling knitted hats online to mowing the grass or shoveling snow can make extra income that can go toward paying off debt.
- Try negotiating with your creditors. While you’re getting creative about new income, make sure to call your creditors and see if they are willing to negotiate the price you owe. Sometimes, creditors will be willing to make a payback plan for less than you owe to ensure they get some of their money back. If you are behind on your mortgage, call your loan service provider and see if you can be granted a forbearance. Even the Internal Revenue Service may be willing to negotiate taxes owed if you qualify for an offer in compromise or an installment agreement.
Once you have exhausted all your options, it might be time to contact a bankruptcy lawyer. New Haven bankruptcy lawyers offer free consultations and can help you determine the next steps.