How to Pay off Debt without Filing Bankruptcy

Discharge Your DebtI am a Richardson TX bankruptcy lawyer.  I represent debtors in Chapter 7 and Chapter 13 bankruptcy cases.  Even though my legal practice is built upon filing cases for debtors, I always look for other alternatives for my clients first.  Bankruptcy is not for everyone.  Sometimes my clients simply need to create a budget to help them save money or develop a strategy for paying off their debt.

A budget is a great tool for managing money.  By writing down a reasonable list of monthly expenses my clients can better determine how to reduce their monthly expenses.  Being reasonable in the amounts is important.  First, don’t set unreasonably low amounts.  Review monthly bank statements to determine how money is spent.  If you spend $800 a month on groceries then setting a monthly expense of $300 for groceries might be unreasonable.  On the other hand, you will probably be able to identify where you are wasting money, and trim those expenditures in order to reduce your monthly expenses.  Don’t forget to give yourself spending money.  You won’t be able to stick with a budget if you don’t give yourself a reasonable amount for recreation.

Sometimes all that is needed in order to get control of debt is a strategy.  For example, if you have five credit cards with balances, don’t pay them all equal amounts each month.  Pay minimum payments on four of them and then pay as much as you can afford on the card with the highest interest rate.  Once the first is paid off then there will be more money to devote to the next card.  As cards are paid off the remaining cards can be paid off faster.  Just don’t forget to prioritize the cards with the highest interest rate.  If you get a large tax refund at the end of the year then you may be better off adjusting your withholdings so that you get that money each month instead of the end of the year.  That money can be used to pay off the debt faster which will save you interest payments.

If after reviewing your debt and budget you cannot afford to pay off your debt in a reasonable amount of time then consider filing bankruptcy.  Filing bankruptcy may allow you to reorganize your debt so that it can be paid off in a reasonable amount of time or you may be able to discharge it entirely with no payment at all.