In the face of mounting debt and no way to pay it back, people get desperate to get some debt relief. There are a number of options that they can consider when they wish to eliminate their debt and people will often give bankruptcy some serious though when they have been struggling with overwhelming debt for a while. However, this option should never be taken lightly because it can give rise to various consequences. It can have a negative impact on one’s credit, preventing them from getting any and increasing the current rates. Moreover, individuals will also have to have their assets liquidated and lose a lot of their possessions.
Therefore, they should consider the following tips before they actually declare themselves bankrupt:
Devise a Plan
Individuals should take an hour for consolidating the expenses and bills in order to get an idea of their monthly expenses. Secured debts should be the starting point, including the car and the house. Mandatory incidentals should be considered after them, which include insurance, groceries and utilities. Credit card statements will be next and will be followed by the wants and expendables such as gym membership, clothing and eating out. The totals should be tallied up for determining how much is being spent on unnecessary and frivolous items and they should be cut out accordingly.
Credit Before Bankruptcy
If individuals believe that they may have to declare themselves bankrupt, they should immediately stop the use of their credit cards. This is because when you do file, you will not have any means for paying back this debt and this may be regarded as fraud by some courts. The creditors that keep calling incessantly should be contacted and they will work out a payment plan or other ways for resolving the situation. Matters will only become complicated if the creditors aren’t contacted.
People should also give some thought to selling the extra vehicles they may have. A vehicle that’s repossessed will have a major negative impact on your credit. NJ bankruptcy lawyer, Ralph A. Ferro Jr., says that people should take inventory of the storage and the house and decide what possessions are needed and what fall under the category of luxuries. Doing the latter will help individuals in getting their hands on some extra cash and they can also chose to move to a smaller location when they have less stuff. The money that’s earned via the garage sales should be used for paying the most important debts like mortgage and rent. These should be followed by vehicle payments, other loans and finally credit card bills.
Get a Second Job
Apart from the primary job, individuals should also give some consideration to a second job. This is because it will be immensely helpful in bringing in some extra and much-needed money. People can consider their talents and use them in a beneficial way. They can also take a look at the services that are needed within their locality and apply for it.
As long as these tips are followed, individuals might actually be able to prevent filing for bankruptcy.