Debt Zapper - 3/5 - Finding ways to reduce and stay out of debt, while saving for the future.

Bankruptcy Questions

Sticking with the theme of answering reader questions today, another reader question that I get is: “How do I know if Bankruptcy is my best choice, and what Bankruptcy Services are right for me?”

  • First, you need to consult a financial advisor or Bankruptcy Attorney to have them evaluate your situation for you. Every situation is different, and only a licensed professional can truly help you make the most informed decision. If you look in the phone book (or google search) for bankruptcy services, attorneys, etc. you should find some in your area. Many offer the initial consultation for free.
“Should I contact Chapter 7  Bankruptcy Lawyers or Chapter 13 Bankruptcy Lawyers?”
  • Many attorneys that specialize in this field offer services for BOTH types of Bankruptcy, and more. I always say Knowledge is Power, so before your meeting (or even phone call) research what both Chapters are. Know what your assets and liabilities are.  The more information you can provide them, the better assessment and recommendation they can provide for you.
Will everyone know that I am Filing For Bankruptcy?
  •  Every situation is different. It does become a public record, and it is printed in your local paper (with a ton of other things). If someone is specifically looking for this information, they probably will be able to find it. Otherwise, people probably won’t know unless you choose to tell them. My personal opinion on the matter is that if filing is the best choice for your family in order to start fresh, then you have to do what is best for your family. People who judge you and think less of you, probably aren’t the best people to have in your life anyway. If they truly cared about you, they’d be supportive and understanding, and willing to help in any way that they could.

How do I fix my credit?

I love getting reader questions via my Contact Us Form, and the one I most often get is, “How do I fix my credit?” The answer is, it takes time, and hard work. This is a situation that doesn’t usually happen overnight (Though the loss of a job, loved one, illness, etc can happen instantly and be the cause of the delinquency). The fact of the matter is that hindsight is 20/20. You can look back and think things such as:

  • I should’ve done a better job of saving for tough times
  • I should’ve never used my credit card to purchase _________
  • I should’ve paid cash for _________
  • I should’ve taken more overtime when it was offered
  • I should’ve ____________ (insert hindsight thought)

Should’ve is a haunting thought. We all should’ve, but didn’t always. What you CAN do is:

  • Request a copy of your credit report, to see exactly where you stand.
  • Create a Budget that is within your means, AND STICK TO IT.
  • Contact creditors to work out an arrangement
  • Stick to your arrangements
  • Get updated credit reports throughout the year to keep an eye on your progress. (You can get 1 FREE from each agency each year. I suggest getting one from Agency 1 in Jan, Agency 2 in May, and Agency 3 in September.)
  • Be diligent and mindful of all of you spending choices, paying as much as you can to pay off and get out of debt.
  • Once debts are resolved, be proactive in saving, make smart purposeful credit choices, and pay on time!

Debt Negotiation

I’ve been talking lately about acknowledging your financial situation, and taking steps to resolve any financial crisis situations. This is the time of year when many people get tax returns back, and are in a position for a potential debt negotiation. Of course, the best solution is to pay off your balance in full, or to even continue to make payments, but when that is not possible, there are circumstances where some creditors will settle your debt for a fraction of the total amount due.

Their best offer is usually a one-time lump sum payment, which a tax return or a bonus is good for. Other times, they’ll allow you to make payments on an agreed upon reduced amount. The MOST IMPORTANT THING is to get any settlement offer and acceptance IN WRITING before you make the first payment. Then, keep records and receipts of your payments with that letter, in a safe and easy to find place. You’ll also want to check your credit report a few months after it’s paid in full to make sure it is reflected there. If not, you’ll have your paper trail to rely on to get the situation rectified. While not the best case scenario, it should give you a positive feeling to know the debt is resolved, and it won’t be lingering over your head anymore.

Stop Collection Harassment

If you know me at all, you know that I cannot stand for anyone to be harassed or bullied. Yes, there are deadbeats out there, but there are also good, hard working people who have fallen on difficult times, and just need a break. It’s all well and good to tell someone that it’s their own choices and decisions that got them into a bad spot in the first place, but chances are, they already realize that. Going forward, they’ve probably learned some pretty difficult lessons, but that doesn’t help them with resolution to their current and existing problems.

There are laws and regulations that state what collection actions can and cannot be taken. Consumers DO have rights, and you can stop collection harassment for good. The first step is to determine what money you have coming in, and then create a budget. You’ll want to account for ALL necessities first, and see what you have left over, and then allocate accordingly. Sometimes, you owe more than what you are bringing in, and that’s where you have to make some tough choices. You can call all of your creditors and see what arrangements they are willing to make. Knowledge is power. Be wary of accepting any arrangements, until you’ve had a chance to look everything over, and are certain you can meet the new obligations. If you still can’t pay everything, you need to really evaluate what your options are. Just not paying will only cause the problem to expand, and your stress level to increase. Don’t be afraid to take the necessary steps to stop collection harassment.

The first step to financial recovery is evaluating your situation. Once you have the information in front of you, you can move forward with correcting the problem.


10 ways to save money


These are 10 ways to save money that I personally use, I hope one or more are helpful to you and your situation!

1. Excessive Utility Bills: Keep your A/C and heater tuned and cleaned, change your filters regularly and invest in thermal curtains to help cut costs.

2. Hair Cuts: We have little boys that are adorable with short hair. We purchased clippers, and cut their hair (and Nick’s) at home to avoid hair cut fees for four of the five people in our house! Continue reading 10 ways to save money