Many of us live paycheck to paycheck with little or no savings, disaster lurks just around the corner. With unemployment or illness it can make covering even minimum credit obligations impossible.
Quick fixes such as taking out a home equity loans or cashing in a 401(k) usually don’t work and may even exacerbate the problem.
Change your money habits.
Trim your expenses.
Bring your lunch to work.
Buy store brands instead of name brands.
Get a less expensive cell-phone plan.
Ask your church or synagogue administrator to lower your dues.
Drink tap water instead of bottled water.
Increase your income.
Take a part-time job.
Hold a garage sale.
Sell stuff you don’t need on eBay.
PLAN for the future. Prioritize your bills.
PAY 1st: Mortgage or rent, utilities, the grocery bill, life-sustaining prescription drug expenses, and car loans and insurance.
Optional Bills: Income taxes, student loans and medical insurance can have severe consequences but wouldn’t immediately threaten your well-being.
Bottom of the pile: Credit cards, medical and dental bills, and personal loans are your least important responsibilities. Your credit report may be in shambles, but at least you’ll survive.
When ALL else FAILs. Bankruptcy.
Chapter 7 Bankruptcy Liquidation: Eliminates most unsecured debt while protecting your home or property.
Chapter 13 Bankruptcy: Designed for individuals with decent incomes who simply are overrun by debt, requires you to present a plan to pay off debts within five years.
Many people associate bankruptcy with shame and embarrassment. Bankruptcy is a difficult choice, but it may be your only one. Don’t apologize.