Guest Author - Rose Mary
If you currently have unbearable debts and thinking of wiping it off from your credit by declaring bankruptcy, there may be other options available. Try to improve your situation before you investigate the bankruptcy option. No matter which way you go, evaluate the steps below to see if you could avoid taking that drastic step.
First, look at all your secured debts such as mortgage and car loan. How much are the repayment for each month? What are the interest rates?
Then, list down all the fixed expenses such as power, phone, insurance, food, etc. What are the total costs for these expenses?
Follow by examining your credit card debts. Take out all your credit card statements and write down the amount you owe for each card and their interest rate.
Finally, write down all your other expenses; these are your optional expenses such as entertainment, gym, membership, dinners at restauranta and other impulsive purchases.
Now you should have a better idea of where your money is going. Start to make a plan on your cash; List down all the your savings from the elimination of the optional expenses. You will be surprise at how much money you can save by carefully controlling your expenses. The money you saved can be used to pay down your debts.
Don't try to do it alone because under such a stressful condition, you may be out of control and may not think and plan with a clear mind. Get your family together and let them know your financial problems and have them work together to control the household spending and eliminate the unnecessary expenses.
If you have equity, you are in a better situation because you could refinance or get a secured loan for pay off your debts. If you are looking for bankruptcy as your debt relief options, your may not have any equity available already. But equity is not the only asset as many people tend to forget the things that have cash value, but not sentimental value. Think antiques, old clothes or collectibles and see what you can part with.
List down all the assets you own which your can sell and cash out. Check the closets, garage and storage locker and find out what you can live without. Then, cash them out through garage sales, eBay or consignment shops. Use the money to pay down your debts as much as possible.
Arrange an appointment with a credit counseling agency and let the counselor understand your financial situation and draft a budget for you. Review the debt management plan proposed before your sign to enroll into the plan. You may get a few plans from other credit counseling agencies for comparison. Choose the one which best suits your current financial needs. Although a debt-management plan can have a negative impact on your credit, it is better than bankruptcy.
Utilize your out-of-work time on a second or part time job. Although you may not earn much in your part time job, a little money coming in can keep a bad financial situation from getting worse.
Bankruptcy may be your easy way out from debts, but the consequences that may follow you can last for 7 to 10 years. Always look for other alternatives before chosing for this dramatic options.