Filing bankruptcy is a difficult choice to make but there are times where, despite your best efforts, you have no choice but to do so. There are benefits to filing including being able to be free from debts you have no financial means to deal with. Once collection efforts reach lawsuits, wage garnishment, and bank levies, you can only get back on financial track with the help of the relief from filing a bankruptcy action.
There are things you can do up to and during your bankruptcy. You may undergo debt counseling before you can file a petition with the Bankruptcy Court. Here are 10 tips that will give you an edge to reducing debt so that your bankruptcy will go smoother.
1- Do not take on more debt
You cannot file bankruptcy until a set time has passed since your most recent credit cards or loans were taken out. You have to stop borrowing money and the sooner you do, the sooner you can get the relief that bankruptcies offer.
2- Do not pay collection agencies
You will be throwing good money after bad. Save whatever money you can from your bankruptcy filing fees or your legal fees. You will get to settling debts or having them get discharged out of the bankruptcy itself.
3-Do not close out any credit cards
The bankruptcy will hurt your credit as it is. Most unsecured debt like credit cards will be discharged or crammed down in the bankruptcy. Leave them alone for now.
4 Get on a budget
You will need to live on a budget after your action has been completed. If you file a Chapter 13, you will need to make monthly payments to a Trustee. If you do not stick to a budget you could miss those payments and see your action get dismissed.
5- Do not answer collection calls
You are not obligated to explain anything to any collection agent if you are filing bankruptcy. The calls will stop as soon as your petition is filed. Save your time and energy and focus on earning money and living on cash.
6-Eliminate all unnecessary expenses
Get rid of premium cable channels. Get rid of magazine or newspaper subscriptions. Cut back on salon visits and so on. It is not fun but it will be worthwhile because you will get out of bankruptcy sooner.
7-Before you file ask credit card companies for pay plans
If your debt is becoming unmanageable, talk to your creditors. They may give you lower interest rates or lower payments temporarily which will help as you prepare for bankruptcy.
8- If you can pay any small credit cards off, do so
The fewer credit cards and debts you have as part of the bankruptcy, the better off you will be.
9-Get as much information about bankruptcy as you can
If a debt relief service works better for your situation, do what you can to avoid filing bankruptcy. If all you have is unsecured debts, debt relief may be better.
10- Get credit counseling
You may be required to before filing, but get credit counseling for more debt reduction tips.