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Debt’s Emotional and Mental Toll

Debt – it is a word that can quickly cause anxiety for many Americans. Credit card debt continues to rise, reaching up to $420 billion in 2018. The average household has almost $7,000 in balances carried over to the next month. Credit card debt comes with high-interest rates, which makes it even harder to pay off.

Debt plays a serious role in the a person’s emotional and mental well being. The more debt an individual accumulates, the more likely they’ll deal with stress and anxiety of having to pay it off. Too much debt can take over your life.

If debt becomes too overwhelming, bankruptcy tends to be the last option. There is bankruptcy help in Scottsdale, but that might add a whole new level of stress and anxiety. So, if you’re going through debt right now, consider how it is affecting you emotionally and mentally.

Anxiety and Depression

A study done by Dr. John Gathergood of the University of Nottingham found that those in debt were twice as likely to undergo mental health problems, anxiety and depression included. If this becomes an issue, feelings of worry and hopelessness could arise, making the situation that much more difficult to get a grasp on.

Embarrassment

Admitting that you’re in debt can be embarrassing for some, especially if they’re in so much debt that bankruptcy is a realistic option. In society, money tends to be linked to our success. If you have it, you must be successful in life. If you don’t have it, then you’re not as successful.

With this mentality, many struggling with debt will hide it and act like they are okay financially. The issue is that this could lead to even more debt. They may say yes to expenses that they shouldn’t be in their situation. Plus, they could be avoiding the much-needed help friends and family could offer.

Frustration and Anger

Debt is frustrating. For some, it can be so frustrating that it makes them angry, especially if the debt is out of their control. Anger may arise if the debt was a result of losing a job, an unexpected expense, identity theft, or a serious illness or accident. Frustration tends to come when the debt is from previous years that you wish you wouldn’t have done. Either way though, this mentality won’t help your situation.  You may need to seriously consider your bankruptcy options.

Fear

When you live in debt, fear tends to be a common emotion that many feel. It’s the fear of wondering if you’ll be able to make your payments, pay for your mortgage or rent, put food on the table, ensure there is hot water and electricity in your home, or falling into bankruptcy.

Debt brings up many worries and the deeper in you go, the more the fear becomes apparent. Other fears can arise like the fear of wondering what you’ll do next, how you’ll get out of it, what people will think of you, and if you’ll be able to survive your debt.

If you’re struggling with debt, it’s essential that you watch how it is affecting your emotional and mental well being. The stress of debt can quickly take over your life. However, if you can avoid that from happening, you’ll be able to tackle your debt with a clear mind.  Bankruptcy can often clear the decks of almost all debt and give you a fresh start in life, and with your life’s well being.

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Your 2019 Financial Resolutions to Get On Top of Your Debts

Making New Year’s resolutions can be challenging. Where do you start and what should it be about? Some popular resolutions revolve around finances – make more money, pay off the credit card, get out of debt, and another similar turn the corner ideas.

If you are struggling financially and worried about filing for bankruptcy, consider making a New Year’s resolution to help you take control of your debt.

Although when in doubt, there is your top bankruptcy attorney in Scottsdale, the lawyers do not always intend to file for bankruptcy for every client. Consider making some of the following financial resolutions to help you get on top of your debt.

Learn More About Finances

Make a New Year’s resolution to improve your financial literacy. The more you understand finances and how money, budgeting, investing, and debt work, the better off you can become.

The internet has tons of blogs that seek to help you take control of your finances. Browse through some that offer information to teach you about finances, rather than provide band-aid solutions to a single problem.

Start a Budget

If you are struggling with debt, you have likely heard the word budget from time to time. That is because a budget is one of the best ways to give you a snapshot of your actual financial situation. A budget shows you how much money you bring in each month and where you are spending it all each month.

To start a budget, write down your total monthly income after taxes. Then, begin to create expense categories. First, write out your fixed expenses (rent or mortgage, insurances, utility bills, and anything else that stays the same or similar each month), then move to your variable expenses (the ones that change month to month like entertainment or dining out). Be specific and honest with your categories.  Keep track of the spending on your phone or on a small notebook in your car.  Every dollar.

Increase Your Monthly Income

Another good resolution to help with debt is to aim at increasing your monthly income. It could be as little as $100 a month or up to $1,000. No matter what the number is though, make sure it’s realistic for you.

There are many side gigs you can do on top of your full-time job. You can get into some freelance work, teach students on the side (for example, guitar or piano lessons), or if you have a hobby in which you create things, you could start selling them.  You can drive for Uber or Lyft a few nights a week, for example.

Set Up a Savings or Emergency Account

Even though if you are in debt and you want to retire it quickly; it’s important that you have an emergency fund. That money is not there for whenever you want it. It’s there for when you absolutely need it.

Ask yourself if you could afford a $500 unexpected expense right now. Would you be okay, or would it push you even farther into debt? Either way, it’s in your best interest to start setting aside small amounts of money each month into an emergency account.

Target a Certain Debt

If you have multiple debts, one of your resolutions could be to target a particular debt. Instead of making the minimum payments on each debt every month, bump up the amount you pay for one debt that has the highest interest rate.

Take the debt with the highest interest rate and make that your primary target first. With the other debt, keep up with the minimum payments. Once you pay off the debt with the largest interest rate, that money can go towards the next debt, and so on. It will turn into a snowball effect until you have everything paid off.  It might take years to get there, but at least you will be on the path to paying everything off and avoiding bankruptcy.

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4 Steps to Take to Avoid Filing for Bankruptcy Again

Going through bankruptcy is a stressful time. Although the stigma around bankruptcy and how we view it is changing, it is still something that many people are ashamed of. For some, going bankrupt was the result of a job loss or medical crisis they could not afford to pay back. But for others, bankruptcy is the result of overspending. No matter the reason though, bankruptcy tends to be the last option for families or businesses.

Sometimes, even after filing for bankruptcy and going through all the qualifications to continue, there may come the point when a second bankruptcy case is looking like the only option. If this is the case, you likely wouldn’t want to go through the process all over again.

There is a lot of bankruptcy help in Scottsdale if you find yourself in that position. However, there are steps you can take before possibly pursuing a second bankruptcy claim that could help get your debt under control.

Speak With Your Creditors

Just as much as you do not want to file for bankruptcy, neither do your creditors. When you claim bankruptcy, the creditors do not get the same amount of money as they would if you were paying the debt. You may be able to use that to your advantage.

Speak with your creditors and anyone else you owe money to. See if they would be willing to negotiate a payment plan or giving you a few extra grace months until you can gather enough money.

Sell Assets

If you are filing for bankruptcy again, it’s because you don’t have enough money. One way to bring in quick cash is by selling assets. The more you can sell, the more cash you can bring in.

Go through your home and see what items you have that you no longer use or need. It could be clothing, jewelry, artifacts, even a car. Make a list of what you could sell and see if it’s something you can live without.

Take a Second Job

If you are really close to filing for bankruptcy, it may be time to look for another job. The more money you can bring in, the quicker you can pay off your debts to avoid bankruptcy. Although taking on another job is not the most popular step to take, it could bring in enough additional income that you could get straightened out with your creditors.

Ask for Help

If you have exhausted all other avenues and are not sure what else to do, it may be time to ask for some help. Many find this embarrassing the first time, and likely more embarrassing the second time. However, if you can negotiate a loan from a friend or family member, it could be exactly what you need to put the idea of bankruptcy out of your head.

In the end, there is no quick solution to avoid bankruptcy. You will need to find ways to increase your income and reduce your expenses to help get you back on your feet. Work with a budget to keep track of your finances, and to help prevent you from falling into this situation again in the future.

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Why You Should Not File for Bankruptcy

In some circumstances, filing for bankruptcy is the only solution to deal with your financial crisis. For others though, bankruptcy is actually a bad idea and should be avoided.

Each situation will be different, depending on how much debt you have and what kind of debt it is. It’s essential that you seriously think about the benefits and downfalls of bankruptcy, and see if it is the best solution for your current situation.

Your top bankruptcy attorney in Scottsdale is ready to help you with all of your bankruptcy needs. First, though, see if your reason for bankruptcy is a good one.

Cannot Pay Small, Unsecured Debt

Unsecured debt is commonly known as past due to credit cards. It’s debt that has no outstanding collateral for the credit card company to seize from you. That means the lender lets you spend as much as you want without tendering any security in case you default on the loan. If you do default on your payments, there is nothing for the lender to repossess.  While they certainly can sue you, that again only gets them a judgment.  Eventually, that judgment will likely lead to garnishment of your banking accounts and a paycheck.

This isn’t to say that you can stop paying small loans and you’ll be fine. There are still issues involving your credit and the chance of the lender suing you in court. However, this is not a good reason to claim bankruptcy. In many cases, you or your bankruptcy lawyer can negotiate with the lender to set up a payment plan that works for you, or to pay a lump sum to clear up the debt.

There are also occasions in which the lender may write off your debt as uncollectable, but that isn’t a solution to rely on.

Student Loans, Income Tax, Court Judgment, or Child Support

Bankruptcy doesn’t necessarily erase all of your loans. In some cases, bankruptcy won’t help you with certain loans. Depending on what you owe, each situation is treated individually.

Filing for bankruptcy for debt like student loans, income taxes owed, certain court fines or penalties and child support won’t do you any good. There may be extreme cases when bankruptcy can quash this kind of debt. For the most part, though, bankruptcy can’t do anything about these types of debt.

Stop Collection Agencies from Calling

If you are wary of collection agencies calling you all the time, there’s an easier way to make them stop than filing for bankruptcy. Through the Fair Debt Collection Practices Act (FDCPA), if you request them to stop calling, they must oblige under federal law.

Send a written letter to the collection agency stating you do not want them to contact you anymore. If they continue to call after your request, keep a record of the phone calls, you can sue the collections agency later and potentially collect damages and fees.

Want to Restart

If you’re looking at bankruptcy as an easy way out of your debt, you may want to reconsider that mindset. For starters, there will be certain debts as we mentioned that will never go away after filing for bankruptcy.

Filing for bankruptcy is also hard on your credit. Bankruptcy remains on your credit record for up to ten years. That means if you want to take out a loan for a new vehicle or a mortgage, you may have a hard time being approved for many years to come.

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My Workplace is Going Bankrupt – What Do I Do?

When a business goes bankrupt it, it isn’t the management and owner who tends to get hit the hardest. Instead, it is the on the ground workers who are more likely to feel the hit the hardest.

Higher paid employees like management who would know more about the bankruptcy likely have enough money saved up that they can get by. For entry-level employees and those not in management, however, chances are they won’t be as well off.

If you fall into this category and your business is going bankrupt, it can be a scary time. You are likely wondering what will happen to you. Will you still have a job? Are the bills going to pile up and will you have to file for bankruptcy yourself?

We want to provide you with the best bankruptcy help in Scottsdale. So, if your company is going bankrupt, as an employee, here is what you should know.

It depends on the Type of Bankruptcy

There are two types of bankruptcy claims that a business can go through. Depending on which one is being processed, will determine what happens to you as the employee.

If your company is filing for Chapter 11, the business is asking help from the courts to repay creditors and sell off assets. There is a chance you could get laid off as they go through cost-cutting measures. On the other side, the employer may retain all positions, but written employment contracts may be up for renegotiation that could not end well in your favor.

If your company is filing for Chapter 7 though, this is the liquidation of the entire business, meaning the company’s existence comes to an end. Most likely all employees will be out of a job after the end of the liquidation and the bankruptcy concludes.

Unpaid Wages Will Get Paid Out

If you get laid off due to the bankruptcy liquidation, any wages you’ve earned that has not been paid will be treated as a debt owed from the employer. There is a cap for wages, and salary earned up to 180 days before bankruptcy.

You cannot guarantee payment, however. In the Fair Labor Standards Act, unpaid wages are not covered. This means if there are not enough assets to pay for all of the unpaid wages, you may not receive anything at all.

You May Lose Your Pension

Most likely your employee pension plan will get terminated in the event of a liquidation. There was, though, the Pension Benefit Guaranty Corporation (PBGC) put in place to protect private sector workers. So, if your employer cannot pay your benefits, the PBGC will help out to fill the gap in pension assets. 

Vacation Pay

If you have accrued vacation days, they will fall into unpaid wages. This means you are likely to get compensated for them. However, once again, you cannot guarantee that you will receive your payout. The labor laws differ from state to state.

These are a few of the things to look out for if your company is filing for bankruptcy. If handled well, you could still be compensated for any unpaid wages, pensions, benefits, and vacation days after discharge. However, there is always the risk that you will receive nothing if the company cannot come up with enough money to pay their debts and your owed wages.

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Dealing With the Emotions of Bankruptcy

For many, accepting the fact that their finances are beyond their control and that bankruptcy is the only option is challenging. The thing is, though, bankruptcy should not be looked at as the end of the world.

Filing for bankruptcy is a way of admitting that you need help with your finances, and are willing to put in the work to regain control. However, the word bankruptcy still has a negative connotation to it. With that can come the stress on your mental and emotional well-being.

When going through bankruptcy, it is important that you remain as strong as you can. That is why we have the following six tips to help you deal with your emotions while going through bankruptcy.

Realize You Are Not the Only One

Filing for bankruptcy can be a blow to the ego. Your debt got out of hand to the point that there was nothing more you could do to control it. It can negatively affect your mental well being. The last thing you need, though, is for you to be hard on yourself which will only make you suffer even more.

Understand that you are not alone. Many people go through a bankruptcy claim, and many of them come out better after it’s all said and done. Look at a bankruptcy claim as a step you’ve taken to regain control of your finances, and not that you’ve given up. The truth is, you haven’t given up by taking this path because it’s only the first step of many that you’ll be taking to get out of debt.

Speak With Your Attorney

Your bankruptcy attorney is there to answer all of your questions and to guide you through the bankruptcy processes. By going with the top bankruptcy attorney in Scottsdale, they know how difficult a bankruptcy claim can be on someone’s mental well being. A good attorney will be compassionate and understanding, all while not allowing you to give up mentally and emotionally.

Lean on Family and Friends

Even if you want to keep your bankruptcy claim very private, it is still beneficial to have someone you trust to lean on. A close friend or family member will be able to listen to your problems and give you a shoulder to cry on. Take advantage of this as to avoid bottling everything inside.

Educate Yourself on Finances

After filing for bankruptcy, it’s a good idea to start reading up on what you can about finances and recovering from bankruptcy. Financial education will help you through your bankruptcy journey, as well as prevent you from ending up where you were before all of this. 

Seek Counseling

If you find that bankruptcy has taken an extreme toll on your mental health, seeking out counseling services is a good idea. These trained professionals can listen to your problems, and give you advice and coping mechanisms that will help you make it through bankruptcy.

Volunteer

For some, keeping their mind busy will help clear their head and stop thinking about bankruptcy for a moment. Going out and volunteering is an excellent way to do this. Volunteering is a way to lift your spirits by doing something good for someone else.

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Moving Forward After Filing for Bankruptcy

Filing for bankruptcy is not something families want to do. Unfortunately, though, it is something many American’s have to do.

Filing for bankruptcy is not the end of the world. In reality, it is actually the opposite for many people. It can be looked at as a fresh start with finances, and a way to plan your path to financial freedom. However, it isn’t as easy as it sounds. After filing for bankruptcy, it takes a lot of time and dedication to continue moving forward. Bankruptcy is not a quick fix and is a decision that must be taken seriously.

For some, when the possibility of bankruptcy is an option, the question of how to move forward afterward will come up. With our bankruptcy help in Scottsdale, and along with some of the following tips, we will help you move on with your life after claiming bankruptcy.

Keep Paying Any Reaffirmed Debts

Some debts can survive bankruptcy, which means you will still have to pay them down. There are loans which are entitled to the value of the collateral. This means you will still be required to make the payments agreed upon in the original loan documents.

It would help if you didn’t look at these reaffirmed debts at as something negative. As long as you continue to make your payments on time, the reaffirmed debts can help you rebuild your future credit score.

Use a Secured Credit Card

Continuing with life without a credit card can be challenging. Many companies require a credit card before making a reservation, renting something, or even trying to purchase an item.

Using a credit card is what also helps build and improve your credit rating. A good credit score will allow you to apply for loans and mortgages, whereas a negative credit score is likely to get you denied. However, if you have a poor credit score or went through the bankruptcy process, it could be difficult to obtain one.

A secured credit card is something you should consider using after going through bankruptcy. These credit cards a basically pre-paid cards. You must deposit money into the card account before making any purchases with the card. The money is used as collateral; therefore you can only spend up to what you deposited. You can, though, deposit more to increase your credit, or even be rewarded an increased credit line from the bank.

Avoid Building Debt

One of the best things to do after applying for bankruptcy is avoiding what got you there in the first place. Try not to accumulate any new debt. Keep paying all of your bills on time. Create a budget to help you keep your spending in check, as to not spend more than what you’re earning. The more you can do to keep your cash flow higher than your expenses, the better chance you have of avoiding any more debt.

Don’t let bankruptcy be the end of your finances and your life. Although it will require work on your part, you should think of it as a fresh start to help you get your finances under control. By committing to it, you’ll be able to repair your credit score, pay off all of your loans, and work your way towards financial freedom.

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Keep Your Credit – Avoid Bankruptcy

Debt is scary. When you open up your account and see that you owe more money than you can spare, it can quickly become overwhelming. Sometimes, the stress leads one to believe that the only remaining option is to file for bankruptcy.

Although bankruptcy doesn’t have to be the end of the world, it is best to leave it as a last resort option. If you can no longer pay any of your debt and have done all that you can to try and get afloat, bankruptcy may be your only option and ironically, the best option.

Before you make your decision, see if there are any other things you can do before calling for bankruptcy help in Scottsdale.

Sell, Sell, and Sell Some More

When the word bankruptcy comes to mind when you look at your finances, that is when you know you need to take immediate legal action. See what you have that you can afford to live without and sell it. The more quick cash you can bring it, the more debt you can pay off and avoid filing for bankruptcy.  But do not do anything until you seek counseled advice from licensed bankruptcy lawyers.

Bring in More Money

See if there are ways that you can bring in more money each month. That additional income could go straight to your debt to pay it off quicker. There are many side-gig jobs available that will pay a decent wage. Whether it be a skill you have that you can teach to children, or are crafty and can sell items, there are lots of little things you can do for extra cash.

Crack Down on Your Spending

If you still have a bit of time before you have no choice but to file for bankruptcy, sit down and go through your spending habits. See where you can make cuts and by how much. Set up a budget based on your monthly income, and try to get as much money going into your debt as possible.  But do not do any of this until speaking to a licensed bankruptcy lawyer who can and will help you map it all out in advance—do not guess on the right steps, let your lawyer show you the actual steps to make as you go.  This feels better, a lot better, as you go.

Ask for Help

There is no shame in bankruptcy.  The President of the United States has done it. It is so easy to get ourselves into debt, and so hard to get out of it. Maybe all you need is a small loan from a family member to get your payments back on schedule. Asking for help from family, friends, and professional financial people can help keep you on track to avoid bankruptcy.  Your lawyers too will show a way out.

If you’ve done all you can and bankruptcy is your only hope, do not fret. Bankruptcy does not mean the end. Although it will affect your credit score, you can then get yourself back on your feet and start over.  Your bankruptcy attorneys will show you through the tunnel to the next and hopeful life phase beyond discharge.

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Removing the Bankruptcy Stigmas

When you’re talking about bankruptcy, it can be a scary conversation. Unfortunately, there is still a negative stigma around filing for bankruptcy, even if it the best solution for those considering this solution.

The bankruptcy stigma comes in a variety of themes. You may be worried about how your friends and family will react when they hear you talk about bankruptcy. It can also be challenging to get a credit card, or even get one at all, which can give you an unsettling feeling.

If the stigma is what is holding you back from claiming bankruptcy and you know it is the best decision for you, disregard these issues. Remember that thousands of people have gone through the same thing and they come out on top after it all.  As mom and dad said, “this too, shall end.”

Social Bankruptcy Stigmas

One of the hardest stigmas to overcome with bankruptcy is the concern of what people will think of you. Chances are there are people you know that have gone through the same situation you are in right now. Although bankruptcy cases are a “public” courthouse matter, typically people do not go out searching to see who filed for bankruptcy. Plus, you can keep it as private as you want.  Don’t ask, don’t tell—virtually nobody will even know you went through this cleansing and liberating process.

Emotional Stigma

If you find yourself feeling guilty for filing for bankruptcy, again, it is more than okay. The federal government offers bankruptcy for a reason—people deserve a second chance.  Big time.  Lots of the time, people who claim bankruptcy had no other choice and did everything they could. Many factors are outside of your control contribute, including the local and national economy. So, if you have guilt for not paying your bills as you should be, that doesn’t make you any less responsible.  You have done your best, you will do your best again.

Financial Stigma

The social and emotional stigma with bankruptcy is something that you can and will keep private, or seek counseling to help you through. Unfortunately, the financial stigma around bankruptcy is one that need not be inevitable. When you claim bankruptcy, your credit score goes down for only a short time—it will skyrocket later. It will be initially more difficult to get credit for things like a home or car loan. The good news, though, is that you can work your way back to a high credit score and remove the stigma altogether.  Most post-discharge consumers find themselves normalized on credit and their lives within a few years.

It’s the Best Option

In the end, it’s important to remember the benefits of claiming bankruptcy in your situation over the stigmas around it. Bankruptcy came to be as a safety net for those who need help getting back to a level of life they can survive in.

If you are thinking about bankruptcy, speak with the top bankruptcy attorney in Scottsdale to help you through the process.

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Three Tips to Stop Stressing About Money

Although it may seem like the answer to many of your problems, having more money will not magically solve your financial woes. Sure, earning more money can certainly help your situation, but it is not the be all end all. Ultimately, you will experience a degree of stress regardless of how much money you make. While stress may never be eliminated entirely, you can take steps to reduce it as much as possible. Bankruptcy lawyers in Scottsdale recommend using the following three tips to quit stressing.

Find a side gig

Living paycheck-to-paycheck is never easy and the inability to save money can lead to worry and financial stress. In order to avoid this, think about ways to earn extra dollars, such as finding a higher paying job or an awesome side gig. Sustaining multiple sources of income is essentially like an insurance policy; it helps you not only pay the bills but also have reliable income if you lose another job.

Be in the know

Understanding the nature of your finances is critical. Failure to stay up-to-date with your money will exacerbate your financial distress. Thus, opening and addressing mail immediately is important. Not only that, you should maintain a calendar so you know and understand when things are due. If you are having a difficult time paying your bills, find a financial advisor or creditor to help you.

Cut your expenses

There is no doubt that overspending will lead to a diminished savings account and an increased balance on your debts. Not to mention, this all has a significant impact on your level of anxiety. You should take some time to eliminate unnecessary expenses. Consider your mortgage, for example. Ultimately, you should keep your mortgage or rent payment to less than 25% of your gross income.

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