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Working With A Bankruptcy Professional

A few years ago, when I realized that I couldn't pay my mortgage anymore, I knew that I needed to do something to correct my finances. It seemed like I just couldn't catch a break, and after losing my job, I knew that I was in trouble. I started looking for new work, but I knew that I needed to fix my credit somehow. I was at the end of my rope, until a friend talked with me about the possibility of declaring bankruptcy. She explained that it helped her to start over. I met with a bankruptcy attorney who was incredible to work with, and I was amazed at how much it helped my situation. Check out this blog to learn how working with a bankruptcy professional could help you.


Working With A Bankruptcy Professional

When You Don't Want To File For Bankruptcy: Smarter Approaches To A Debt-Free Life

by Roël Schiks

Bankruptcy should always be a last-ditch effort at unloading debt. Considering the ugly impact that bankruptcy can have on your credit over the next ten years, you should seriously consider and weigh the consequences of this option before following through on it. If you want to explore other options, consult with a debt consolidation attorney. Here is some of the advice such an attorney might give to you:

​Organize Your Debts from Highest and Oldest to Lowest and Youngest

​A mortgage is probably at the top of your list, followed by car payments (if you do not own your vehicle outright). After that, every single credit card and loan that you have should be listed and organized from oldest and highest debts to youngest and lowest debts. This provides you and the attorney with a visual that will guide you as you decide how best to consolidate and/or pay off your debts. 

​Deciding How Much Debt You Can Reasonably Handle

​What creditors see on a report really does not provide the whole picture to your credit-worthiness. On paper, it may look as though you can easily handle fifty thousand in loans and credit card debt. In real life, maybe you have four kids and a stay-at-home spouse to support, so the numbers the creditors and lenders see is not very realistic or does not really apply to you. Your lawyer can help you determine just how much debt you can actually handle. This is key in deciding how best to consolidate your debts versus which debts you can easily pay over time. 

​Consolidate the Highest and Youngest Debts

​First and foremost, consolidate your highest and youngest debts. When you are able to consolidate credit cards and loans (minus education loans, which can only be consolidated separately) with high balances, you can begin to make smaller, more manageable payments to just one lender. Younger debts (credit cards that are less than a year old) should be paid off and closed entirely to prevent temptation. Because these cards are so new, closing them will not impact your credit as much as closing older cards. Even after you have paid off the older cards, keep those accounts open. 

​Sell Off or Return Expensive Purchases You Do Not Need

​If you recently bough a third car, a boat, a cottage, an RV, etc., return it or sell it -- these are luxury items you would have to let go of in a bankruptcy anyway. If you let go of these large purchases now, you can reduce your debt and financial burdens, and possibly gain some cash to pay down your other debts. Otherwise, if you find that you do have to file for bankruptcy, the courts can force you to sell these non-essential items to pay your debts.