Because of the economy, thousands of families are finding themselves laid off with credit card, medical and other debts stacking up with no option for relief. There may be a few ways to get out of some that debt to avoid a potential bankruptcy.
While it may seem obvious, not many families or individuals have figured out how to do financial budgeting. Even the up and coming generation are falling behind in financial literacy according to Barbara Kiviat in her article, How to Teach Kids About Money, Time Magazine. As a result , money troubles mount because no one knows where the money has gone. Investing in a software program such as Quickbooks or even a basic Excel template can help see the flow of money from the paycheck to what bills and expenses are being paid on. Putting down the actual month to month spending on paper will show a consumer what areas they can cut back on.
One way to get debt free would be to reduce that credit card debt. Filing for bankruptcy can stay on a consumer’s credit report anywhere from 7-10 years. Call the creditors one at a time and explain the household situation. Already spoke with a bankruptcy law firm? Tell the creditors. Laid off? Let them know that too. Chances are, if they will offer you a credit card debt settlement. They would rather get a part of the loan paid off, then nothing at all if it was discharged in a bankruptcy.
If a creditor has garnished wages for anyone in the household however, it may be a good idea to talk to a bankruptcy attorney. The will have the legal advice to help you handle a more delicate credit situation. Many attorney’s will give you a consultation for free, and may be able to help you avoid bankruptcy as well.
A credit counseling program might help individuals save significantly when credit card interest rates keep climbing. There are hundreds of services out there and some may be more reputable than others. Check with each counseling service before entering into the program to know what fees will be charged, and how credit scores will be affected.
One benefit of a credit counseling service is their ability to freeze interest rates on credit cards. If considering a debt counseling program it is important to make sure that each creditor would be willing to enter into the program.
If all else fails, bankruptcy may be the only recourse for some creditors. With the jobless rates climbing and the housing market flat, it is becoming more common for debtors to enter into bankruptcy. While filing personal bankruptcy can stay on a person’s credit for eight to ten years, a personal credit score will build significantly after a bankruptcy has been concluded from the court. Weighing options carefully and checking with an attorney to see if bankruptcy is the best course is important before filing.
Bankruptcy should be the last recourse if no other way to get out of debt is available to the debtor. Cutting up credit cards, getting on a budget and making a plan will help any individual to stabilize personal finances.
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