1. Credit Counseling

If you are feeling overwhelmed by debt, one alternative is to take a serious look at your finances and budget. First, determine whether your monthly income and necessary monthly expenses are in line. Also, focus on expenses that can be cut. To help you with this process, you may wish to seek the assistance of a professional credit counselor. Before you can file bankruptcy, you must take a credit counseling course. The U.S. Department of Justice, through the U.S. Trustee Program, maintains a publicly available list of approved nonprofit budget and credit counseling agencies.

  1. Debt Consolidation

If you have good credit, another option is debt consolidation. Debt consolidation involves moving or transferring your debt from one creditor to another. For example, if you have a high interest credit card, you may try to do a balance transfer to a lower interest credit card. If you have equity in your home, you may try tapping into this equity to help bring down debt that carries a higher interest rate. One caveat though is to clearly understand whether the debt is secured or unsecured. Unsecured debt generally refers to debt created without any collateral promised to the creditor. The most common type of unsecured debt is credit cards. Secured debt is debt secured by a lien of some type in a debtor’s property either by the debtor’s own agreement or involuntarily with a court judgment or taxes. The most common type of secured debt are mortgages, equity lines of credit and vehicle loans.

  1. Debt Settlement

A third alternative is to try and settle the debt directly with your creditors. This can be a very difficult process and typically only works if you have a small number of creditors. Make sure to have all settlement documented in writing. Also, please be careful because sometimes payments (even small payments) toward a debt can serve to extend the statute of limitation on the collectability of the debt. There are also companies that market themselves as debt settlement companies that will handle the negotiations for you, sometimes for high fees.

Please contact the Las Vegas bankruptcy attorneys at Luh & Associates if you have any additional questions or concerns. We look forward to answering your questions!