If you are having trouble paying your bills and have ended up in debt, you might be thinking about filing for bankruptcy. With personal bankruptcy, it does help to get creditors off your back, but keep in mind some financial responsibilities are not erased, including some medical bills and taxes you owe the government. Bankruptcy is also an expensive process on its own and can have a drastic effect on your credit rating. Here are some things to try doing before you file for bankruptcy.
Try to Negotiate Your Debts
The first thing you should always do is try to work with your creditors and negotiate your debts or settle them. Just because you can't pay a debt all at once, doesn't mean you won't be able to settle with the creditor. Make a list of all your past-due bills and debts in collections, then call each creditor one at a time. Ask if they are willing to negotiate your debts, whether that means setting up a reasonable monthly payment plan so each one gets a small payment, or paying it off in full, but at a lower cost than what you currently owe. Many creditors are willing to work with you so that they get their money instead of dealing with bankruptcy.
Sell Off Assets to Pay Your Bills
You might also need to find some extra money in order to pay your debts, whether you start paying them in full or you need help with settling with your creditors. When you are close to filing bankruptcy, you are probably nearly out of options. In this case, selling off some of your assets might be the best option. For a large amount of debt, consider selling your home. This isn't ideal, but not only does it relieve you of your mortgage payments, but it allows you to downsize and move into a smaller and more affordable home. Between what you earn from the sale and what you save each month, you have a good shot at paying off your debt. Think about other assets that could earn you money as well, such as vehicles or valuable jewelry.
Consider a Debt Consolidation Program
Debt consolidation allows you to pay just one large payment each month, instead of trying to pay a dozen different creditors. What you do is go through a debt consolidation company who asks for a single payment each month, then uses that to pay off each of your creditors. It helps you get creditors off your back, keeps the items from going into collections, and can help prevent bankruptcy by taking care of your debt. It is easier for some people who get overwhelmed with deciding how much to pay each creditor. In many cases, you end up paying less in the long run as well, which can be an added bonus.
If you end up needing to file for bankruptcy, consult an attorney from a firm like Reppe Law Office right away. Bankruptcy attorneys can look at your options and tell you which type of bankruptcy is best for your situation.