Declaring bankruptcy is a relatively extreme measure. Having said that, when used in the right way and at the right time, it can actually save you money, sustain your peace of mind, and get you back in a good place financially. It can literally set you free.
Nonetheless, declaring bankruptcy can also be expensive and time-consuming. Furthermore, it can have an enormous impact on your credit score. As a result, this can have far-ranging effects on other aspects of your life, such as applying for an auto or home loan and even applying for jobs. You may be surprised to learn that waiting to declare bankruptcy until you are broke can actually do more harm than good. If you’re on the path to financial ruin, you likely should consider bankruptcy sooner, not later. You will end up with more in the end.
Because declaring for bankruptcy has long-lasting effects, bankruptcy lawyers in Scottsdale recommend the following alternatives to help you navigate through your financial situation.
Pay Bills Another Way
Working a second or third job is never a good time, nor is it a great way to spend your evenings and weekends. If it’s just for a short period of time, however, the extra income could put a real dent in your debt. What could be better? Although it may be difficult, consider working another job or two in order to make extra cash, if you can climb out of your debt hole within 12 to 24 months, this non-bankruptcy approach may make sense.
Follow a Budget
You’d be surprised to learn that many people don’t follow a budget and, as a result, don’t have a strong grasp on where their money goes (other than to pay bills, of course). In the absence of a written budget, it’s very difficult to see where or how you can make changes in your life that will free up your money.
For many people, the largest portions of our income go towards housing and transportation costs. For example, if you rent, downsizing your home and moving to a smaller place or searching for a roommate could largely impact your rent cost (it could also save you money on utilities as well). If your car is a gas guzzler, for example, selling and buying a small, fuel-efficient car could save you a lot of money that can be put towards debt payments.
Negotiate With Your Lenders
Fortunately, many lenders will lower interest rates or even consider adjusting your payment plan if you tell them you’re going to file for bankruptcy. This is particularly true of credit card companies, which stand to lose the most. Don’t be afraid to negotiate with your lenders in order to alleviate part of your situation. Or hire your bankruptcy counsel to conduct these negotiations for you.