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Struggling with Money? Bankruptcy May Be an Option
There may be several options available for those with financial problems, including filing for bankruptcy.
October 08, 2011 /Law Enforcement PR News/ -- As the current economic slump drags on, anyone struggling to make ends meet can at least take comfort in the fact that they not alone: More than 1.5 million people filed for bankruptcy in 2010, an increase of nine percent from 2009. Unfortunately, this underscores the fact that millions of families and individuals are still struggling in this difficult economy. The following tips may be useful to anyone who is feeling overwhelmed by their financial circumstances and is looking for a way to start turning things around.
Managing Credit Card Payments
Personal credit card debt can easily become a major financial drain in any household, especially when money is tight and people feel they have no other way to pay for basic essentials. Fortunately, there are a number of ways to help keep credit card debt under control.
The first and most important step in managing credit card debt is to stop charging new expenses to your card. Personal credit card debt can take years to repay, so depending on your interest rate you can easily end up paying several times more than the cost of your purchases over the course of repayment. You have much better things to spend your money on than credit card interest, so start now by resolving to pay all of your expenses with cash, check or debit card.
The next step to reining in your credit card debt is to start paying off the principal. If you are only making the minimum payments each month, most of what you pay probably goes toward the interest. This means that the amount you owe will decrease very slowly, even if you avoid making any additional charges to your card, forcing you to pay far more in interest over the long term.
Since the interest you are charged for your credit card is usually much more than the interest you can earn on a savings account, only save as much as you need for emergencies -- perhaps $500 or $1000 -- and put the rest toward paying off your debt.
If you have more than one credit card, check to see which one charges the highest interest rate and start paying off the principal on that card right away. Keep making the minimum payments on any other cards and put everything you can toward the credit card with the highest rate. Once the first card is paid off, move on to the one with the next highest rate, and continue this approach until all of your cards are paid off.
Many credit card companies offer introductory rates at zero percent interest for the first several months, which are often applicable to balance transfers as well as purchases. Although you should always watch for hidden fees and make sure you understand what the charges will be after the introductory period ends, it may be worthwhile to transfer your balance to a card with an introductory offer to avoid accruing additional interest while you pay off the balance.
Minimizing Housing Costs
Rather than borrowing to maintain your lifestyle when money is short, it is important to recognize that it may be necessary to adjust your lifestyle to fit within your budget. This may involve moving to a different home. This can help you determine whether or not filing for bankruptcy is in your best interests.
Many homeowners currently are trapped in mortgages that are underwater, meaning they owe more than their house is worth. It may be decades before home values return to pre-recession levels. Many homeowners have also lost their jobs, making it impossible to make their extremely high monthly mortgage payments.
To make matters worse, there have been several concerning practices that have made things difficult for homeowners. Those looking to reduce their payments or refinance their mortgage have often found that their mortgage has been sold to other parties. Finding the correct company to deal with can be a confusing and frustrating process.
Homeowners who wish to remain in their homes may consider filing for Chapter 13 bankruptcy. In Chapter 13 bankruptcy, debtors make monthly payments on debts that they owe. This process will last from three to five years, depending upon several factors. This could be very beneficial to homeowners with high amounts of equity in their homes.
Exploring Student Loan Options
If you are repaying student loans in addition to your other debts, keep in mind that these loans tend to be relatively low interest and therefore are not necessarily as urgent to repay as higher interest debt such as credit cards. Furthermore, educational lenders are often very flexible and will usually work with you to find a repayment plan that fits your budget. It is important to keep in mind that these debts are not dischargeable in any type of bankruptcy filing without showing a severe financial hardship.
Seeking Legal Help
Sometimes, despite the best of efforts and intentions, it can still be impossible to make ends meet. If you are struggling with difficult financial circumstances, an experienced bankruptcy attorney can help you weigh your options and find out if bankruptcy may be right for you.
Article provided by Walton Legal Services
Visit us at www.waltonlegal.net
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