Filing for bankruptcy

What You Can Do to Avoid Bankruptcy

 

Bankruptcy should be your absolute last resort. Seek professional advice from reputable debt companies before you make drastic decisions that you may regret.

 
Unlike their younger Gen X counterparts, many mature women don’t go into debt buying big-ticket items or taking exotic vacations. The majority of baby boomer women who are in debt run up their credit lines paying for living expenses such as groceries, medical care and utilities. If you think your debt might be out of control, here are some ways to tell and how to deal with it.

Signs of a Debt Problem

You may feel as though you are managing your debt well, but you should be on the lookout for signs that indicate that you’re headed towards financial problems.

  • * You often withdraw cash from your credit cards.
  • * You make minimum payments on your credit cards and the balances never seem to go down, or when they do, you run them right back up again.
  • * You routinely get collection calls and notices from creditors.
  • * 20% or more of your income goes to payments to creditors every month.
  • * Credit card companies start charging you over the limit fees and late fees.
  • * You have to use credit cards to cover your monthly expenses because you don’t have enough income.

 
According to Employee Benefit Research Institute based in Washington, D.C., household debt for people over 55  more than doubled between 1992 to 2007, and that was before the economy went into a recession. If you show these signs of struggling with debt, you’re not alone and you do have options.

Getting Help

If you feel as though things are getting out of control, then you need to find a company that offers trustworthy help. There are many different options available to you. You may be able to work with a credit counselor who can help you create a better budget and teach you how to negotiate with your creditors. Another option may be to get a debt consolidation loan, so that you can roll your individual debts into one loan payment with a lower interest rate. If all else fails, you may need to consider debt settlement, which means that you work with an agency who makes arrangements with your creditors to settle your accounts for less than you owe.

Pros and Cons

There are advantages and disadvantages to all these options. Credit counseling companies will charge you fees and it’s up to you to put their advice to good use. A debt consolidation loan will help pay off your current debts, but if you continue to run up credit card debt in addition to your loan debt, it will do you more harm than good. Debt settlement will save you money by reducing what you owe, but it does have a negative effect on your credit report.

As a final note of caution, bankruptcy should be your last resort. Seek professional advice from reputable debt companies before you make any drastic decisions. Managing your finances can be harder than putting puzzles pieces together, but if you keep working at it then, eventually, you will get the pieces together in the right order.

 

About the Author:
Andrea Standin has studied personal finance and debt for over a decade. Her passion lies in helping others learn to live financially independent lives!

Photo: nOnick