Bankruptcy laws provide debt relief for consumers in the Phoenix area, the State of Arizona, and across the United States. However, with the benefits of bankruptcy also come requirements that must be met in order to qualify. In addition, bankruptcy can have drawback, such as the potential impact on the credit score, and loss of property if the bankruptcy is not done correctly. While bankruptcy is often the best option for people already in debt, there are steps you can take to prevent bankruptcy in the first place.
Avoiding Past-Due Debts to Begin With
Many people fail to learn about proper financial and debt management before they are on their own in the real world. Without the knowledge of how credit works and the possible risks, it can be all too easy for someone to rack up credit card bills that are far too high for their income, which can be the start of the path to bankruptcy. The following are some things that you can do to avoid getting into debt in the first place.
Have a budget – Assess your necessary expenses compared to your income, and be honest. Whatever is left over should be divided between savings and discretionary spending. If you exceed that amount of non-essential spending, it can take away from funds needed to pay your bills, which can cause you to rely on credit. Sticking to a budget can help keep your credit bills low.
Have an emergency fund – Bankruptcy does not always happen because of irresponsible spending, as many people face financial hardship due to medical conditions, divorce, the loss of a job, or other unexpected events. Having savings you can use in these situations can allow you to pay your bills without credit.
If You are Already Struggling with Debt
If you wake up with the stress of your debts and being unable to keep up with payments, you might still be able to prevent a bankruptcy case. The following are some steps you might consider:
- Increase your income by taking on a part-time job or a side business – at least temporarily until you have caught up with your payments.
- Talk to your creditors. Bankruptcy is not in their interests either, and there might be options to allow you to catch up, such as a couple of months of suspended payments.
- Seek help from your family or other loved ones who might be willing to cover some debts for you. Even if you have a loan with a family member, they can be more flexible than corporate creditors. Of course, before resorting to this option, you want to be confident that it will resolve your debt problems, and will not create undue friction with your loved one.
- Sell assets or property to get some extra cash to pay off your debts. However, you have to be very careful before using this option, or you may unwittingly end up converting exempt property that is protected from creditors into non-exempt assets that are not protected from creditors. In general, if selling property will not completely resolve your debt problems, you are better off considering other alternatives, such as bankruptcy.
Speak with a Phoenix and Mesa Bankruptcy Attorney Today
At Yusufov Law Firm PLLC, our skilled Mesa and Phoenix bankruptcy lawyer aims to find the right solution for each unique situation. We can advise if bankruptcy is right for you or whether there might be other options to avoid a bankruptcy case. If you would like a free consultation, you can contact us online via this website or by calling (480) 788-0098 for the Mesa and Phoenix office, or (520) 745-4429 in Tucson.
German Yusufov is a debt relief and bankruptcy attorney. He began his legal career in Tucson as a litigator, representing individuals and businesses in all types of legal disputes.