If you, like most clients, haven’t made up your mind about bankruptcy, and aren’t yet 100 % certain you want to declare bankruptcy, I want you to make a phone call.
No not to me. 😉
Call each of your credit card companies, your auto lender, and your mortgage lender. Ask for their “hardship department.” Tell the person who answers that you are considering filing bankruptcy, and then ask them to work with you to lower your payments.
Guess what? Credit card companies and banks don’t want you to declare bankruptcy. If you do, they won’t ever see a penny of the money you owe them. And since it’s logical that these companies would rather get something than nothing, you have nothing to lose by calling them and asking them what (if anything) they can do to help you lower your payments.
When you call, have a specific dollar amount in mind that you know you can afford to pay each month, and don’t settle for paying a single penny more. Ask them, “If I can pay $100 a month for the next twelve months, and then go back to making my original payments, I can stay out of bankruptcy court.”
I know it’s weird that a bankruptcy firm is giving you advice on how to stay out of bankruptcy, but I truly believe in helping clients and non-clients recover from their financial mistakes so that they can enjoy a bigger future.
And the truth is: bankruptcy isn’t for everyone.
Although bankruptcy helps people wipe the slate clean and get a fresh start, it is a big decision that shouldn’t be made before you gather as much information as possible.
And sometimes, the solution is as simple as calling your creditors.
Keep in mind, though, that if you do not have a clear plan for digging yourself out of your financial hole, you should consider exploring bankruptcy. And here’s why: If you are struggling with your finances, and you do not see a light at the end of the tunnel, you will probably continue to struggling for a few more years. As you fight to stay afloat, you will likely miss some payments here and there, causing your credit score to drop even more. In two years, it will be the same (or worse) than it is now.
But if you declare bankruptcy now, think where you will be in four months: debt free! Plus, you will be on the path to rebuilding your credit score, and if you follow the simple steps, your FICO could be over 720 in 12-24 months.