Debt is such an integral part of the American way of life that you don’t even blink twice when you hear people talking about being in hundreds of thousands of dollars of debt. Maybe the fees have become too high, and you can no longer make minimums, and you find yourself falling further and further behind, month after month. Suddenly you find yourself almost entirely underwater.
It is possible to handle a financial bankruptcy, but hopefully, this article can give you some life-lines to handle the situation before filing for Chapter 7 or Chapter 13.
Liquidate all possible assets
Liquidate may sound like a fancy banking term, but it just translates to something we all understand. Cash. If you find yourself rapidly approaching the bankruptcy option, then it’s time to take stock of anything and everything that you own and do your best to turn it into cash.
With the advent of the internet, you can auction off just about anything, from jewelry to old records, maybe lightly worn clothing, radios, stereos, there is a market for just about anything.
If you don’t prefer to use the internet because let’s face it, it can be a shady place sometimes; you can hold a good old fashioned garage sale. And then if you want to go really old school, take your valuables to a pawn shop, and they’ll give you whatever your goods are worth in cash.
Don’t be afraid to go bigger than jewelry and smaller electronics. If you need to sell off the car or get rid of the boat, then don’t be scared to take that step. The financial distress that filing for bankruptcy creates is far worse than being without your boat. Of course, please act within reason, but be willing to make some genuine sacrifices.
A lot of people have a tough time letting go of their stuff, and it makes them feel as if they are letting go of their lives. That is not the case; liquidating your assets is the best way to preserve what may remain of your lifestyle. Afterall, repossessions do occur. Upfront cash also helps manage interest that may have been allowed to accrue. Interest is always keeping you from actually being able to start chipping away at the principal of your debt.
Use your network
Networking is a necessary tactic when you find yourself getting in a little bit too deep into debt. Reaching out to family and friends is sometimes a prudent strategy. Now, most people aren’t in amazing financial positions themselves, but if you are in a real bind, your support network is going to have your back. Sometimes the best answer is the most straightforward answer, and that is to open your mouth and ask for help. But, if you are going to ask friends and family for help, make sure they understand the extent of your situation. Nobody likes to think they are doing a nice one-off for a friend and then find themselves getting sucked into being someone else’s bank.
Make sure they understand that you are near filing for bankruptcy and are going to need a lot of help. Most people will be honest and upfront with you if you are honest and upfront with them. If they can’t help, they will let you know, maybe they can only help you once, and if they have a little more to spare than thank goodness, you have some excellent people who have your back. Be respectful of what their responses are, and be sure to be grateful for what help people can provide you, always.
Networking also includes reaching out for third-party expertise. If you are struggling and need guidance, such assistance is available via a finance professional. Professionals from https://www.fcwlegal.com/bankruptcy/personal-bankruptcy-cincinnati/ highly recommend seeking out financial counseling when facing possible bankruptcy, just to ensure you are aware of all of your options. A professional can also give you a better perspective on your situation.
After all, it could be much less serious than you thought, or maybe they can give you that critical reality check so that you can move forward in the right direction. Professionals in finance, like bankruptcy lawyers, can also help you deliberate whether you qualify for Chapter 7 or Chapter 13 filing if your situation has become that dire. They can also give you valuable insight into your finances and not only guide you on the legalities but also help you make strategic steps tailored to your situation.
Take budgeting seriously
If you are in a situation where you do have regular income and are being overwhelmed by the payments, then it’s time to investigate your budget. Track and analyze how much you are spending and why. The goal in this method is to cut corners as tightly as you can while still paying for your bills and mortgage/ rent and of course, other basics like food. If you are at a point where you are in this much financial distress to consider bankruptcy, then you need to make sure you are contributing as much of your check as you can to ensure that the minimum payments are made.
Something to consider cutting would be eating out, which can get very expensive, very fast. Maybe that hundred dollars you’re spending on treats and lunches is what is going to help you pay off your penalties and ensure that you can make those minimum payments or pay more than just interest. Also, consider buying things like clothing and other items sparingly. If it is not an immediate need, then you need to cut it out of your budget. It is much better for you to live very frugally for a year or two than to get completely overwhelmed by your debt payments.
Enroll in a hardship program
Let’s face it, creditors want their money back, and they aren’t too fussy over how they get it back, so long as the money returns in the full amount to their pocketbooks. Lots of banks have hardship programs that will allow for your monthly rate to be lowered. Lowered rates will, in the end, make paying off the loan or debt longer, but it will allow you to stop incurring penalties. A critical thing to make sure of when you are enrolling in these programs is that both your monthly payment and your interest rates go down.
If you don’t make sure of that, sometimes the interest rate goes up while only the monthly payment goes down. Then you are pretty much right back where you started. Even if you can handle the monthly payments, you have created a situation where you cannot start paying down the principal because the interest is now so high. But if you can get a program that lowers both, then you can avoid bankruptcy and stop getting penalized for late payments.
In the end, if you are considering filing for financial bankruptcy, then you need to start doing everything you can to handle the situation. Do not wait any longer. You must take action now and start changing the course of the situation.
It would be best if you employ all the tactics mentioned above all at once. Ask for help, get your spending under control, sell some items for cash, and reach out to your bank to see if you can get your rates reduced. It may feel impossible, but there are steps you can take to improve your situation.