Is Bankruptcy Really The Answer?

Nowadays it is easy to get enough debt in a short period of time to make bankruptcy look like an appealing option.  Are you sure that’s the best option for you? Before you decide to file for bankruptcy let’s take a look at other solutions such as debt management program or do it yourself methods.

Debt Management Plan

A Debt Management Plan helps reduce outstanding debts over time to help you regain control of your finances. Most of the time the agency will assign a counselor for you to help you identify the pitfalls and challenges in your way. He also helps you understand your current financial situation and where the change needs to happen. 

Bankruptcy

Working with a debt management agency can help you in a number of ways. First, it keeps the creditors away from you as they do all the necessary arrangements and negotiations. Second, the counselor assigned to you can help you cut expenses in several areas of your life.  Finally, it can help you with ideas on consolidating all your debts into one single debt. 

DIY Tips

However, in most cases all these steps you can do by yourself thus saving money even on paying a debt management agency. Start by tracking all your expenses until the last penny. There are several apps that can help you with that. Once you know where your money goes exactly, decision making will be much easier. 

Following, once you are aware of where your money goes to every month, you can start redistributing your money. Cut the unnecessary costs and add the important ones. Open a savings account and start paying yourself first in the beginning of each month. Save 10% of your gross income and set up a direct debit payment to your savings account. After that, find a loan option to consolidate all your debt into a single one.

Debt Consolidation 

There are several loan types that can help you consolidate your debts. Loans basically fall into 2 categories: long-term and short-term ones. Bank loans with lower interest rates, credit card companies lending money with a bit higher interest rate but still secure loans and student loans that are on the edge of the 2 categories as they can be for 2-10 years. All of these types of loans are secured, offering low interest rates and mostly government regulated. In the State of California, there are auto title loans in Sacramento, payday loans and pawnbrokers as well providing emergency cash loans without credit check to all applicants. These short-term loans offer much higher interest rates but can solve your debt situation much faster. I recommend conducting a thorough research in the loan field before committing yourself to any of them.

As you can see, before filing for bankruptcy there are several things you can try. Debt management programs are good options for you, also you can try the DIY methods mentioned above. Remember, that filing for bankruptcy is recorded for 10 years therefore, if any other method is viable for you choose that one. 

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