Though technically you can enter into bankruptcy on your own, I DO NOT recommend it.  It will be well worth the time and stress in hiring a specialized bankruptcy attorney to help you through the process.

To file Chapter 7, which is a full liquidation (if you qualify), attorney fees can run around $1700 and up, depending on the complexity of your case.

To file Chapter 13, which is a wage earners plan, basically a reorganization of debt with a repayment plan of 3-5 years, attorney fees can start at $3000 and up.  It is more expensive to file for Chapter 13 because your case is open for 3-5 years through the repayment plan, which requires attorney involvement throughout the process.

Filing for bankruptcy is not an easy decision, but you may be faced with it.  And if so, I encourage you to find 2 – 3 of specialized bankruptcy attorneys in your area that offer a free initial consultation for you to meet them and ask questions, and find out what all your options are.

photo credit: laura padgett

This post via the Freedom Debt Management blog, an educational resource to help you gain control of your debt management and finances.

Bankruptcy Self Help

If you have been consistently making your payments on time, and continue to have the cash flow to support the payments, then this simple strategy will help tremendously.

Step 1

Make a list of all your debts, including: who is owed, balance, interest rate, minimum payment required.

Step 2
Evaluate your cash flow.  How much do you have to put toward your debt load each month.  Look at your income, less your usual expense (mortgage or rent, utilities, discretionary, savings). 

Step 3

Take the amount you have to pay towards your debt each month, and apply the minimum monthly payment against each debt.  Then, take the additional amount you have left, and apply it to the credit card with the highest rate first until this debt is paid off.  Once you have paid off your first debt, then take the freed up cash flow, and apply it all to your next highest interest rate debt.

Now, if you have credit card debt and mortgage debt, do not apply extra payments towards your mortgage until all credit card debt is paid.  Mortgage debt is still currently tax deductible, and consumer debt is not, so the net interest rate you are paying on your mortgage is actually less than the actual interest rate because of the benefits of the tax deduction.

This post via the Freedom Debt Management blog, an educational resource to help you gain control of your debt management and finances.

How to Eliminate Credit Card Debt