While bankruptcy can offer you a new financial start, it can also put you in a credit hole for months or even years after your case is settled. Most lenders won’t offer credit for up to a year or more after your file, and your credit score will take at least that long to recover.
Here are some ways that you can save money and avoid bankruptcy.
Make Sure Your Bank Balance Stays in the Black
One of the easiest ways to save money is to make sure that your bank balances stay in positive territory at all times. If you overdraw on your account, you could be charged fees of up to $25 or more by your bank. Your payments could also be returned, which means you have to send them again after the due date. This may result in late fees and other charges depending on how overdue the payment is.
Know Your Rights as a Consumer
Your landlord generally can’t increase your rent retroactively. He or she also can’t raise or change your rent until your current lease expires. If your landlord tries to raise your rent or charge late fees based on rent now owed because of a retroactive increase, you should talk to an attorney. Attorneys such as Lazaro Carvajal will help you take on your landlord or anyone else trying to charge you fees or interest that you don’t legally owe.
Talk About Debt Settlement With Your Creditors
A debt settlement may allow you to pay off a balance for less than you owe without having to file for bankruptcy. If the creditor accepts your offer, you will pay in a lump sum to close your balance and have the debt considered paid in full. This is a good strategy to use if you know that you are about to lose your job or you simply want to pay what you can and move on. Generally, creditors will only accept a debt settlement if you show that you can no longer make payments as agreed.
Overall, bankruptcy is something that you want to avoid if at all possible. There are other ways to reduce your monthly payments or reduce your overall debt load without the need to ruin your credit in the process. If necessary, talk to an attorney about alternate options or talk with a financial adviser who can help you create a budget that you can stick to.
Gust Post: Kara Masterson is a freelance writer from West Jordan, Utah. She graduated from the University of Utah and enjoys writing and spending time with her dog, Max.