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Texas Bankruptcy - Managing Your Debt

Living within your means and not overspending is the key to not getting knee deep in debt and ultimate financial freedom. Although life sometimes brings on unexpected financial problems, managing your debt as best you can is the best thing you can do to prevent having to file for Bankruptcy Debt Relief. Although Bankruptcy can sometimes be an excellent option to address your debt, managing your debt before ever having to consider Bankruptcy is most always a better option.

Taking the time to determine your debt liabilities and how much money you have to allocate or spend on debt each month from your job or other income sources is hallmark to managing your debt. If possible allocate a portion of your income to each of your necessary living expenses. If you are still having trouble paying your bills, you should first attempt to work out a budget that details your income and expenses. After you have identified where your money is going, identify your spending priorities. You must have enough for your rent or mortgage payment, utility bills, groceries, day care, transportation, etc. And, after you have subtracted these necessary amounts from your monthly income, you will be able to know how much you will have available to spend on entertainment and other non-essentials if any at all.

Some Basic Steps to Manage Your Debt Include:

  • Trying to reduce your expenses
  • Cutting out any unnecessary spending
  • Don’t eat out
  • Consider taking public transportation or car pooling
  • Purchase generic products at the supermarket
  • Avoid impulse purchases
  • Avoid expensive entertainment
  • Stop incurring new debt
  • Consider substituting a debit card for your credit cards

You should immediately contact your creditors if you are having trouble making payments. Despite the inability of most large creditors to make individual payment arrangements, many creditors do have some program or other options to assist you. Other creditors will try to work out a more suitable payment schedule if they believe you are acting in good faith.

If you are falling behind on your bills you should not use credit cards for anything that you cannot afford to pay for from the month's income in which the credit card charge is made. Most charge cards are very expensive ways of obtaining credit and can become a costly cycle of interest charges and late payments that compound quickly and exacerbate your debt.

Likewise, you should not use payday loans to address a debt problem. People in debt or suffering from an unexpected financial matter can sometimes use payday loans not realizing how costly they can be. They often become very dependent on payday loans once they start the process and may end up taking one loan after another making their situation drastically worse than when they started.

If you are still having serious problems after attempting the steps above, another option may be to contact a credit counseling service to create a debt repayment plan. In these type plans, you will work out a payment agreement with a counselor which in turn helps to negotiate payment arrangements with your creditors. The service attempts to convince unsecured creditors to accept less than the full amount of the debt and to reduce or eliminate interest charges and penalty fees. The downside to these credit counseling plans is that you will still have to pay off all of the debts which can take up to 5 to 7 years and you will probably NOT see a benefit to your credit from doing so. Credit Counseling will often damage your credit worse than Filing for Bankruptcy and burdens you much longer.

Managing your debt before having to seek formal Debt Relief options is the best thing you can do for your financial future. If the burden of debt or the unexpected problems of life happen to you, do the right thing by addressing the problems when they arise. Don’t ignore debt problems. Debt problems can easily go from bad to worse. Be proactive with creditors and try to deal with them as best you can. Besides the methods outlined above there are other methods of dealing with debt responsibly which include consolidating your debt through loans as well as Debt Relief through Bankruptcy. Since these are steps with very serious consequences, they should be taken only after consultation with an experienced attorney.

If you reside in Houston, Austin, San Antonio, or Dallas and have questions about Managing Your Debt please contact The Law Offices of R.J.Atkinson,LLC at 800-436-9056 for a free initial consultation to discuss your legal options. Don’t lose everything. Get back in control of your finances.


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