Find yourself in debt and don’t know where to start? Here’s what to do if you have a lot of debt.
FIRST, GET ORGANIZED
You might find it easier to just turn a blind eye rather than face the reality of your looming debt. Don’t do this! The best way to manage your debt is to be knowledgeable about it, so get organized. Know how much you owe and to whom. Make a spreadsheet and for each debt list the following:
- The creditor
- The total amount of debt
- The monthly payment
- The due date
If you are feeling overwhelmed by this task, just take a look at your credit report, it’ll do the majority of this work for you. Update your list every few months as the total amount of your debt fluctuates.
NEXT, MAKE A BUDGET
Decide which debts to pay off first and make more than the minimum payment if possible. You can only pay as much on your debt as you can afford. If, after getting organized, you find it hard to pay all or some of your bills each month, consider debt relief.
CONSIDER DEBT RELIEF
Settlements are negotiated with the creditors in an attempt to lower the amount of debt due. Once an agreement is met, the terms of the debt relief are put into a contract. Often, the creditor will forgive a large part of the debt in return for a one lump-sum payment in exchange for the debt to be considered canceled and the matter closed.
It goes by many names: debt relief, debt settlement, debt reduction, debt negotiation, debt resolution, etc. But debt relief applies only to unsecured debt, which is a debt that is not secured by collateral, like credit cards and certain types of loans.
LEARN YOUR BANKRUPTCY OPTIONS
If you find yourself owing more money to creditors than you have, or can foreseeably earn, it may be time to consider bankruptcy.
Chapter 7 is the most commonly filed bankruptcy amongst individuals. The assets you own will be liquated and used to pay off your debts. After that, the bankruptcy is usually dismissed. Chapter 7 is often referred to as a “fresh start”.
If you don’t qualify for a Chapter 7, you may be eligible for a Chapter 13, also known as the “wage earner” bankruptcy, because you must have a reliable source of income. Your finances are reorganized into a plan that allows you to pay back creditors over three to five years while maintaining control and ownership of your assets.
REMEMBER TO HIRE A LAWYER
Hiring a lawyer to assist you is one of the most important steps in successfully settling a debt, filing for bankruptcy, and avoiding legal consequences. If you are interested in learning more about debt relief, contact the experienced debt relief lawyer Phoenix, AZ residents recommend from Kamper & Estrada, PLLC. for a free initial consultation.