Debt could prove to be devastating in several ways, and it adversely impacts people more than you can imagine. We understand that household debt at the beginning of April 2021 in the United States, including student loans, mortgages, and even credit cards, reached a whopping $14.64 trillion. This situation cannot be attributed solely to overspending. At times, dire circumstances beyond your control could lead you to a debt trap. It may include long-term disability, job loss, or astronomical medical bills.
According to statistics, over 30 million Americans have already filed for unemployment because of the COVID-19 global pandemic. Moreover, to make things even worse, credit card balances have already reached $930 billion, and mortgage balances have gone as high as $9.56 trillion during the close of 2019. According to Forbes, it is, therefore, quite natural to know that bankruptcy courts in the United States are getting ready for a deluge of bankruptcy filings.
However, bankruptcy may have a damaging impact on your credit report or credit score to be precise. The bankruptcy entry will be present on the credit report for a decade or so. Hence, it is a wise move to learn of ways to avoid bankruptcy so that you can maintain a steady credit score.
Tips To Avoid Bankruptcy For A Steady Credit Score
Focus On Increasing Your Income
You may have to consider new avenues of boosting your monthly income so that you have some additional money to address your outstanding debt payments every month. You may consider doing a part-time job or a side hustle for some extra cash.
Alternatively, it could be worthwhile to sell off some spare jewelry or furniture. You can start paying down your outstanding debt balances using the money. You must swing into action quickly so that you can tackle your debts and you are not falling behind on payments.
Cut Down Your Expenses
If you start cutting down your expenses systematically, you will have more ready cash to tackle your debt repayments every month which will eventually settle your credit score. If you spend less, you may have more spare cash to devote towards debt repayment. You could generate some money by cutting your gym membership, cable services, or skipping morning coffee or takeout for dinner. It may go a long way in addressing your debt payments, and you could successfully avoid filing bankruptcy. Consider reviewing your budget, and you may even chalk out a new one and switch over. It could prove to be immensely beneficial in identifying areas where you could cut down your expenses and devote your attention and extra cash to paying off your overpowering debts. In case, you are heading towards bankruptcy, you may reach out to Richard Weaver Bankruptcy Attorney for expert advice and proper guidance.
Consider Negotiating With Your Creditors
You have access to a host of creditors who are ready to interact and work with you. However, proactive communication is the need of the hour. You may inform your creditors about your financial health. Let them understand that you are going through financial difficulties and need their help desperately. Tell them explicitly that you wish to pay off your debt. Request them to make it easier by reducing your monthly debt repayments or even lower the interest rate. Many banks and credit card organizations offer payment assistance or hardship programs to respond to this situation.
Consider the above-discussed expert tips for generating more income and spending less while negotiating with your creditors. You may use some of the strategies to eliminate your debts and avoid a bankruptcy filing situation. It will help you in settling your credit score.