If you’re sinking into debt or worry that you soon will be, it’s difficult to know how to avoid bankruptcy. The first step is to be proactive and understand it’s possible to get out from under that big pile of bills without filing a Chapter 7 or Chapter 13 petition. Here are a few steps to regain control of your finances before consulting an attorney.

3 Options for Staying Out of Bankruptcy Court

1. Prioritize Your Debts

A budget and plan for paying debts in the right order might allow you to avoid bankruptcy. Your first priority should be your necessities, such as rent or mortgage, utilities, food, and transportation. Child support and taxes should come next. Then reduce all other spending as much as possible, putting as much cash as possible toward paying off your loan or credit card that has the highest interest rate. When it’s paid in full, do the same with the next one.

2. Consult a Non-Profit Debt Management Service

Consider using a non-profit debt management service that offers counseling by telephone and online as well as in-person assistance. A fresh, informed perspective gives you a chance to step back and look at the bigger picture. These low-cost options can help you stretch your dollars, get out of debt, and learn effective money management skills.    

3. Contact Your Creditors

If you want to do your bankruptcy avoidance work yourself, a valuable tactic is to contact your creditors. Explain your situation and offer them a plan for loan payments that involves a reduced interest rate and monthly payment. Many lending companies have hardship programs in place to accommodate those proactively trying to get out of debt. Read agreements carefully and ask questions about anything anyone asks you to sign. 

You have options for avoiding bankruptcy, but if they don’t meet your needs, a Chapter 7 or Chapter 13 petition might be the final solution that makes your life better and gives you back your financial freedom. The Law Office of J. Baron Groshon will guide you in wise decision-making throughout the process. Serving clients across North Carolina with offices in Charlotte, Concord, Gastonia, and Lake Norman, these knowledgeable and compassionate attorneys offer legal advice and representation for bankruptcy and other options to get you on the right financial path. Follow their Facebook page for more legal tips, visit their website to find your nearest location, or call (704) 342-2876 to schedule a consultation.