If you are contemplating bankruptcy, before you do so there are other options for you to take. Here are some ways to get yourself back in control of your debt.
1. Work with your bank. Its not unusual for people to tell their bank that they are getting behind on payments. You want to ask them to reduce the interest rate that you currently pay, they will not forgive your debts so don’t even mention it to them.
If your interest rate is in the double digits see if they will first lower it to a single digit. Banks do not want your loan to default, they want to recover the principal that they loaned you. Lowering your interest rate will help you gain traction financially speaking.
2. Be wise about a debt consolidation loan. The only reason you would want to use a debt consolidation loan is to funnel all loans into one account. It’s easier to pay one company rather than many companies, plus there may be some savings involved. I would only do this if you know what you are getting into, otherwise stay away from these type of loans and companies and pay off the debt on your own.
3. Home refinancing. If you haven’t refinanced your home in 5-10 years you may want to look into what type of loan you qualify for and try to refinance your home. You may end up saving thousands of dollars and your monthly payment can go down. Be sure you research every angle of this move before you do so because there may be closing cost associated with refinancing.
4. Get help from a credit counselor. It’s so easy to walk into debt but getting out can take years of hard work. Reason being, people do not shop around for the best credit card deals, they just sign up for a free t-shirt and the instant approval goes through and they receive the card in the mail without ever knowing their rate. I suggest you get help from a credit counselor or someone who cares about your situation and gives you step to reduce your debt. If you hire a credit counselor make sure they help you lower your bills by negotiating your debt with banks. You can hire a counselor or look into getting help from a non-profit organization. The most important advise I can give you if to do it all on your own. Stop spending, build up your emergency fund and start paying off your debt reducing it little by little.
Don’t throw up your hands yet, stick with it and move forward. Do not file for bankruptcy, if you absolutely have to, talk to an attorney who specializes in bankruptcy before you do so they can give you legal advice. New laws have been put in place where you cannot just walk away from your debts.
