Learning About Bankruptcy

Posted on: 10 March 2021

If you have mounting personal debt, it is time to get your debt under control. One way to get your debt under control is by going through a debt consolidation process with a lawyer. Paying down and consolidating your debt isn't something you can wing; you need to take a coordinated approach, and you need the assistance of an attorney and a financial planner. Debt consolidation is about managing your debt and making changes to your life.

Set a Basic Budget

Before you can start paying off your debt and figuring out how much money you can put aside to paying your debt each month, you need to set up a necessary budget. A basic budget will allow you to take care of essential expenses, like your mortgage, electric bill, and phone bill. It will enable you to take care of groceries and personal care needs and provide you with money for infrequent expenses. A necessary budget is not about allowing you to spend whatever you want; with a basic budget, you need room to start paying down your debt and building your savings.

A financial advisor and an attorney with financial experience can help analyze your spending, figure out what to cut, and how to create a budget you can live with while paying down your debt. The key is to create a budget that meets your financial goals without leaving you feeling too restricted. 

Stop Using Your Credit Cards

If you want to consolidate your debt, you need to stop creating new debt. One of the best ways to do that is to stop using your credit cards. That may mean literally cutting up your cards, putting them in a safe, or going for the classic method of freezing your cards in a block of ice. Put your cards physically away so you can't use them. Then, delete your credit card information from any site you buy from online frequently so you can't continue to use them for online purchases either. 

You don't want to close your accounts, as that can damage your credit score. Instead, you want to stop using them and work to get them fully paid off.

Work to Consolidate Your Debt

Next, you need to work to consolidate your debt. An attorney can all up the people who hold your debt and work to get you better repayment terms. An older lender may be willing to remove all the fees on your account if you commit to a payback schedule. Or they may be willing to accept a portion of your total cost to settle your debt paid on a set payment schedule. Or your attorney may be able to arrange to pay off and move around some of your debt. 

You can then use a debt consolidation loan to pay off your debt once your attorney arranges payback terms so you only have a couple of payments to make each month to pay off your debt. 

If you want to get ahold of your debt, consolidating is the way to go. To successfully consolidate, you need to set a budget you can stick to that will allow you to pay off your debt, you need to stop creating new debt, and you need to work with an attorney to consolidate the debt you have.