Overwhelming debts can cause stress to individuals who are trying their best to get everything paid. There are some circumstances, such as a job loss or unexpected medical issue, that can make it difficult to impossible to get all the bills taken care of.
If you’re struggling to make ends meet, you might want to know what options you have to try to survive. One of the first things that you need to do is to make sure that your basic bills are paid. This includes things like housing, utilities and food. Once those are covered, you can see what’s left to pay everything else.
Setting up your budget
Writing out your budget might help you to see where your money is going. Putting the numbers on paper will either show you that you need to be purposeful with your money or it might show you that there isn’t enough money to go around. When the latter is what happens, you need to figure out what to do.
One option is to contact your creditors and see if they can work something out. Some will but others won’t budge on what you owe. Creditors who aren’t willing to work with you can make it difficult to make ends meet.
When there isn’t enough money
When you simply can’t pay the debts you have, there is another option to consider: filing for bankruptcy. Consumers have two types that they may file – Chapter 7 and Chapter 13. There are considerable differences.
For example, a Chapter 7 liquidates your nonexempt assets to pay creditors but you don’t have any payments to make to the bankruptcy trustee beyond what’s made by the liquidation. Any remaining debt is discharged.
In a Chapter 13 bankruptcy, you make regular payments to the bankruptcy trustee. Those payments are divided up between creditors. Once you make all the payments required to the trustee, the remaining balances are discharged.
Another benefit to filing bankruptcy
When you file for bankruptcy, the court issues an automatic stay. This prevents creditors from being able to seek payments from you. It puts creditors on an even plane so that none of them receive preferential treatments during the bankruptcy process. Many filers enjoy this benefit because it means they don’t have to worry about answering the phone or checking the mail.
Your attorney can explain the ramifications of each option. Use that information to make a decision about what you feel is best for your situation.