When your debt is high but your income is still the same, you need a way to decrease the amount of money you owe your creditors. With this problem, you do have a few ways to pay off your debt and take control over your future finances. However, before you choose a method, it is best to know which ones are available for your situation.
Rework Your Financial Plan
Your first option is to try to rework your financial plan. With this method, you have to know what you are spending every penny on, which gives you an idea of where your money actually goes. Once you know where the money goes, you can cut back on the items that are comforts but not essential for living.
When reworking your financial plan, you have to make a list of the most important bills first. This list is an important step, because it shows you where you can take money from to help pay down your debt. For example, you can stop visiting the coffee shops during work or you can choose to avoid fast food restaurants on your lunch breaks.
You also have the ability to downgrade your TV, cell phone or internet plans, which may save you a good amount of money each year. Even though making some of these changes are not desirable, they can help you increase the amount of money you can put onto your debt to help get rid of it.
Choose Chapter 13 Bankruptcy
In some cases, cutting back on your spending is not enough to decrease your debt amounts. If this is your situation, then your next step is filing for Chapter 13 bankruptcy.
Bankruptcy is not a bad word or a bad thing to do when your debt is out of control. With this option, you work with the courts and your creditors to come up with a scheduled repayment plan.
The biggest advantage to choosing this option is that a bankruptcy lawyer can usually work out a lower repayment plan. The lawyer asks your creditors to settle for a smaller amount of what you actually owe them.
Even though the creditors do not have to approve, the final decision is with the courts. The judge will determine the final amounts based on your income, debt amount and other circumstances such as the size of your household. One factor you should also be aware of is that the courts give you a specific time for when each payment is to be made and how many years you have to pay this amount.
However, before you choose a method for decreasing your debt amounts, you need to consult a lawyer like Howard S. Goodman Bankruptcy Attorney. With their help, you can decide if reworking your finances or filing for bankruptcy is the best option for your financial situation.