Making Sense Of Your Financial Mess

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Making Sense Of Your Financial Mess

A few years ago, I realized that I had a real problem. I hadn't been able to pay my bills in awhile, and I was left wondering what to do. Bill collectors called me non-stop, and I wasn't sure how to go about making things right. Fortunately, a friend of mine who understood my mess explained that it might be a good idea to meet with a bankruptcy attorney. After I went, I was blown away with the level of care and understanding I was given. This website is all about helping other people to see the light, even when they are in the midst of battling a hectic financial situation.

4 Things You Can Do To Avoid Bankruptcy

Bankruptcy should really be a last resort. If you are in a position where you feel like bankruptcy is inevitable, here are three things you can do on your own to get your finances in control and see if you can avoid having to file for bankruptcy. A bankruptcy attorney or credit counselor can help you with the tasks that are detailed below to help you avoid having to actually file for bankruptcy.

#1 Negotiate For Lower Rates & Better Terms

The first thing that you need to do is pull out all of the information for any credit cards or loans that you have. Look at the interest terms as well as your required minimum payment that you have to make each month. You are going to want to use that information to negotiate for lower rates and better terms.

To do this, you are going to want to individually contact each company and talk with a representative about changing your terms. You are going to want to have an idea of what you want to achieve with each phone call. For example, if your interest rate is 6% and you want to get it down to 4%, you may want to ask for a little lower than that to start with, and work on negotiation your way to the rate that you want.

Don't forget that some companies may be willing to write off some of your debt. Although all may not be willing to do so, it doesn't hurt to ask, especially if you are behind on payments. If you can pay off a portion of the debt, you may be able to get them to forgive the other portion, so be sure to save up for this possibility.

#2 File For Hardship With Your Student Loans

Second, if you have student loans, you are going to want to make sure that you explore all of your options. If you are not making that much money, you may be able to apply for a hardship exemption that would allow you to not make payments on your student loans for a certain amount of time. You may also be able to permanently adjust the amount that you have to pay by entering into graduate payment system, where your payments are less now but increase over time. Or you can set up income-based payments, where your payment amount is based on your income so that it varies based on what you are making.

#3 Downsize Your Living Expenses

Third, if at all possible, try to downsize your living expenses. If you are single, consider moving into a house or apartment that you share with others for a while as you work to get your finances under control. Splitting rent can really help lover your expenses. Or if you own your home and are not using all of the rooms, look for some tenants. Just make sure that you draft up a solid rental agreement that protects your interest and screen any potential tenant.

Even if you have a family, see if your kids can share rooms for a year and downsize to a smaller home that is more affordable. Remember, smaller homes often generally mean that the utilities and homeowner's or renters insurance will be less as well.

#4 Get A Side Hustle Going

Finally, a great way to cut down debt is by getting a side hustle going and dedicating the entire income that you make from that to paying off your debt and building up your savings.

There are lots of ways that you can make a little extra money and make it fit in with your current schedule. For example, you can sell items online through sites such as eBay or Amazon. If you have a specific skill set, such as designing web pages or writing calligraphy or making scarfs, see if you can sell that skill as a freelancer. There are lots of great sites, such as Fiverr, that allow you to do internet-based work as a freelancer. Or, you can use a site such as Etsy to sell items that you like to purchase.

You can also make money by driving for a company like Uber or Lyft, or renting out space on AirBnB in your home. Or you can use an application that allows you to do random tasks in your area like TaskRabbit or work for a company where you pick up and delivery groceries for customers. There are lots of side hustles that you can discover in our gig economy. The trick is to find a side hustle that you can enjoy, optimize and make the most money possible out of.

Before filing for bankruptcy, try to renegotiation the terms on the debt that you carry, cut back on expenses by downsizing your living arrangements and take on a side hustle for the sole purpose of paying down your debt and getting into a better financial position. 

Contact a professional like Jeffrey S. Arnold, Attorney at Law, P.C. for more information.