How Can I Manage My Debts?

When you feel completely overwhelmed and bankruptcy is not an option in your personal situation, the first step is to take a moment and a step back–look at what you owe and what money you have coming into your household.   Realize that sometimes creditors will work with you in order to avoid their debt being discharged in a bankruptcy.   One option is to call the creditor and let the creditor know if something horrific has happened–for example, job loss, illness, death of a loved one.   Sometimes creditors have what is called “loss mitigation programs” that can be put in place to help postpone payments.     The second step might be to call a credit counseling agency, preferably one that is a member of the National Foundation For Credit Counseling.   Some months back, I wrote about when credit counseling agencies can help over at Bankruptcy Law Network.

Some experts suggest the “snowball” effect for paying your bills.   Take the smallest bill, make a larger than usual payment on that bill while making the smallest possible payment on the remaining bills.   When that small bill is paid off, move to the next one, making that bill the largest payment, and so forth.   This can work as long as the other creditors aren’t sueing you in the meantime.    One thing you should not do is ignore the entire situation–be proactive rather than reactive.  Take charge of your finances and seek help from a non-profit agency if you need one, from an experienced attorney if you need one, and then if all else has failed, go seek a bankruptcy attorney in your area.   Bankruptcy is the ultimate solution, not the first solution!!