Bankruptcy is often a frightening process. As a leading Dallas bankruptcy lawyer I feel it is important to take the time to counsel clients on all options to see if bankruptcy is avoidable for their situation. If at all doable, it’s always best to avoid bankruptcy in the first place. Despite being in deep debt, it’s possible to carve out a plan to help repay the money owed without defaulting on a loan or having bills remain in collections. Here are some tips for avoiding the need for bankruptcy when possible:
- Contact your creditors. It’s amazing what communication does for an ugly situation. Yes, it’s a hassle to call each creditor individually and discuss the available options, but it’s worth it to avoid a bankruptcy on your credit report. In many cases, creditors are happy to set up more manageable payment options, and are sometimes able to reduce the total amount owed if a large chunk is paid immediately.
- Call in favors. Again, communication is key to receiving the aid needed. Talk to family and close friends. Let them know the situation and discuss monetary help, even if it’s a loan. Generally, family is more lenient in requiring repayment of a loan and don’t charge interest. This is a great option in conjunction with paying off a chunk of debt that’s been reduced.
- Create a budget. Many things modern society considers a necessity aren’t. Take a hard look at your expenses and cut out anything but the basics for decent living. That means maintaining a place to live, food to eat, and transportation. Everything else is an extra and needs to be pruned until the debt is more manageable. Use extra money from the reduction of fast food and entertainment expenses to make the smaller payments negotiated with creditors.