When it gets to this point, you need help. Whether it is filing a Chapter 7 bankruptcy to eliminate debts, Chapter 13 or Chapter 128 to consolidate debts, it is nearly impossible to get out of this situation without the help of a bankruptcy attorney.
However, there are certain actions, you can take before you get in this situation to avoid needing to call a bankruptcy attorney.
Make a Budget and Stick to It – Believe it or not, those old home economic basics that our grandparents preached can really make a difference. Budgeting can save you from spending money frivolously and needing to use credit cards. The average American spends far too much on impulse purchases. How many times have you stopped on the way home for take out because you did not have any groceries? If you are like me, a lot.
By writing out a budget, allocating money to certain goals, and following through by buying things before you need them, you can save hundreds of dollars a month. Be the little pig that built his house out of brick, not straw.
Use your Debit Card – Debit cards provide the flexibility of credit cards, but you are using your own money. There is no debt; nothing that has to be paid back later. You also stop overspending because you can only spend your own money.
Often people come into my office knowing that they need help but cannot imagine living without credit cards. Debit cards are a great alternative, which can save you from needing to file Chapter 7 or Chapter 13 bankruptcy.
Just make sure that you do not have overdraft protection. Although overdraft protection sounds like a good idea, for most people, it just creates additional debts and more need to rely on credit cards.
Have an Emergency Fund or Use Credit Cards for Emergencies Only – Emergencies happen. Whether it is a needed home repair, like a roof leak or furnace repair, car or truck repair, or medical emergency, you will have unexpected emergencies. The best way to deal with an emergency is to have an emergency fund of $1000 to $2000, but if you cannot do this, using credit cards can be a good alternative.
An emergency fund is money set aside for unforeseen events, i.e. emergencies. By having a couple thousand dollars set aside, you will not need to use credit cards, get payday loans, or hit your family up for a loan. An emergency will not become a financial emergency too.
However, for many people, saving that amount of money seems like a nice dream, but reality steps in. If this is the case, use credit cards for these situations, but pay off the balances immediately. There will be another emergency, and you do not want a balance on your credit card when it comes.
If you get to the point where you cannot handle credit card debts any longer, give us a call. Our firm offers Chapter 7 and Chapter 13 bankruptcy to eliminate all your debts, and non-bankruptcy alternatives, like Chapter 128 Amortization and Debt Negotiation as well.
Originally posted 12/05/14