The past two years have been a unique time for the practice of bankruptcy. While this is great for the families of bankruptcy attorneys, it was not so great for society as a whole.
Even so, the economic hardship does pose some opportunities for those who have just filed for bankruptcy or might be considering filing. Here are 10 ways to save money and avoid bankruptcy in 2010.
Refinance your home.
Interest rates are at an all-time low. If you are fortunate to have a steady income and you still have some equity in your home, consider refinancing the property for a lower monthly payment. It could make the bankruptcy monster go away.
Negotiate with creditors.
Creditors are also suffering. Negotiating lower credit card payments or settlements on consumer debt might be possible. I have seen clients receive great settlement offers from lenders, even second mortgage lenders, because the lender wants to get something now rather than wait for years for repayment of the debt.
Don’t find out the value of your home unless absolutely necessary.
This could only add to New Year’s blues because no one wants to find out that their home depreciated in value. Many people plan to live in their homes forever. The values should return over time.
However, in the event that you do need to file for bankruptcy, you might need to obtain a property appraisal. You don’t want to risk the equity, if any exists. You may want to sell your home before filing for bankruptcy or choose a Chapter 13 bankruptcy to protect it from foreclosure.
Find nonspending hobbies.
You might need to be very creative, but there are hobbies that do not require spending money. Costly hobbies can be a factor in bankruptcy. Hike up a mountain!
Maintain the status quo.
Many people cannot pay off their debt. Thus, they carry a credit card or loan balance from month-to-month. Obviously, everyone wants to be debt free. See if you can avoid increasing your debt in 2010. That alone would make it a successful year.
Consolidate credit card debt.
Try to see if you can reduce the number of active credit cards. This does not mean you have to shut down lines of credit. But try to reduce the many cards that have balances, whether it means transferring one balance to another or focusing on paying off one or two specific cards. It might help to steer clear of bankruptcy.
Negotiate vehicle loans.
Sometimes you must buy something new, or even used. Your car has broken down for the last time and you just cannot rely on it anymore. Play hardball with car lenders. Whether you are in the market for a new or used car, negotiate and don’t be afraid to walk away. Lenders are desperate to get rid of vehicles.
Don’t co-sign on any loans.
Try to avoid being the nice person that you are and put your name on anyone else’s loans. You don’t get any benefit from co-signing, but you do get all the risk!
Know when enough is enough.
Sometimes, the best decision is the hardest to make. Maybe you might have to walk away from your house because it is not affordable. That might still keep you out of bankruptcy court.
Hopefully, just reading that word made you smile. I know, you are reading the column of a bankruptcy attorney. But I promise, there are still things you can laugh about. Your kids, your spouse, your parents, your dog! Make sure you don’t allow yourself to sink too deep into a depression over your finances and a potential bankruptcy filing.