Drowning in Debt With No Way Out: Three Options to Avoid Filing for Bankruptcy
Debt is very easy to accumulate, but never as easy to get rid of. Whether you’re in debt as a result of unexpected circumstances, or simply from improperly handling your finances, the stress of dealing with the aftermath can often be stressful to say the least. According to an article in the HuffingtonPost, approximately 35 percent of Americans have some form of debt that has been turned over to collections. Many of them end up having to file for bankruptcy as a means to find some relief.
While bankruptcy may prove to be the best option, it is highly recommended that you try other avenues before deciding to file.
- Take Into Account Your Lifestyle
If you’ve already done your research on debt management, then you’ve likely come across tons of information on budgeting and minimizing your monthly expenses. Though this is easier said than done, this is by far the best approach to tackling debts. However, if you’ve reached the point that your expenses far outweigh your income (after budgeting), then it may be time to take more drastic measures. Some suggestions might include:
· Eliminating all expenses tied into pleasures and entertainment. This could include things like cable services, data plans on your cell phone, and even weekly treats to the salon. While you may feel like you deserve some reprieve from working hard every day, sometimes you have to do what you don’t want to, to get where you want to be.
· Downsizing – If you live in a home or apartment that has high mortgage or rent payments, it may be time to consider downsizing. Sure you might enjoy the extra space and amenities; however, something’s got to give. Try to find housing that is well within your means to pay. Even shaving $200 per month off your mortgage or rent payments can help you quickly pay down your debts.
- Maximize Your Monthly Income
Now that you’ve reassessed your lifestyle and really buckled down on your personal pleasures, you should have freed up quite a bit of money that can be put towards your debts. However, if you still find yourself in over your head, another effective solution is finding a method to increase your monthly income. There are plenty of opportunities for you to earn money on the side. Whether you decide to mow lawns for your neighbors, start a dog walking service, or even start a personal finance blog online, you can make a decent living that can be applied to your debts.
- Get Professional Help
If you’ve really buckled down on your lifestyle and tried to maximize your income with no such luck, then chances are you need to get the help of a professional. There are several options for getting professional help including: talking with a financial advisor, credit counselor, debt consolidation service, or consult with a debt settlement attorney. Fox advises all consumers in debt to take caution when considering debt settlement services online and instead opt to work with someone face to face, preferably an attorney as they have legal obligations to do right by their clients.
What is Debt Settlement?
In a nutshell, debt settlement is the process of negotiating a lower balance with creditors. Depending on the service provider you choose to work with, they will negotiate on your behalf to get the outstanding balance reduced to either smaller monthly payments or one lump sum. Should the creditors agree to the new settlement amount, you’re able to pay them something more affordable and get out of debt a lot faster.
Debt settlement is certainly not for everyone. Those who should consider debt settlement might include individuals who can no longer afford the bare necessities as a result of the mounding debt they have. It is also a last resort before filing bankruptcy.
What Are Some Benefits of Debt Settlement?
When working with the right debt settlement service provider (i.e. a company or an attorney), there are several benefits to debt settlement. The Doan Law Firm points out some benefits, which include getting rid of debts faster, stopping harassing (or illegal) collection practices, and avoiding bankruptcy.
It should also be understood that when negotiating a lesser amount there is a possibility of paying taxes on the amount of debt that was forgiven by the creditor. Getting out of debt can be an difficult battle that takes a lot of time and determination on your behalf. However, it is always best to review all of your options before deciding that bankruptcy is the best solution. If you still believe that bankruptcy is the best route for you to take, it is beneficial to consider all of your options with the help of a legal professional who has experience in debt settlement as well as bankruptcy. They can often provide advice and give you assistance in making informed decisions that will benefit your financial circumstances now and in the future.