Stuart Simonsen is a financial industry expert who advises clients on the financial implications of bankruptcy, lawsuits, and fraud accusations. In the following article, Stuart Simonsen discusses how individuals can avoid bankruptcy and gain control of their finances with five key steps.
Credit-driven spending and the excitement of instant gratification have made it all too easy to accumulate and ignore debt. But what happens when the bills pile up and income can no longer cover expenses? For many, the only option seems to be bankruptcy, a drastic measure that can negatively impact creditworthiness and the ability to borrow, rent, or even work.
Stuart Simonsen lawsuit specialist says that it is possible to avoid bankruptcy and the damage that can ensue with the right strategies and mindset. This article will explore these five key steps for individuals to stay afloat and regain control of their money.
Take Stock of Debt, Income, and Expenses
Step one requires a bit of detective work on a money paper trail.
There were over 387,000 filings for bankruptcy in 2022 alone. To avoid the long-lasting impact of bankruptcy on one’s financial records, individuals must begin by taking inventory of the debts they owe.
Stuart Simonsen lawsuit advisor says to start by documenting the total balance, interest rate, and monthly payment for each debt owed, focusing on repaying high-interest debt first. Use this information for step two.
Look back 30 days and track every dollar earned or gifted over the last month. If possible, go as far back as two months. Average the weekly or monthly income and use it as a prediction for next month’s budget.
Stuart Simonsen bankruptcy specialist advises doing the same for all expenses. Don’t omit minor expenses; even the smallest purchases add up.
Consolidate or Settle Debts
Debt consolidation combines multiple debts into one monthly payment. It could be a credit card transfer, home equity loan, or debt consolidation loan.
These plans are not ideal for everyone but may help organize a repayment plan. Before reconsolidating, consider the following:
- Where the debt came from – if expenses exceed income every month, a debt reconsolidation plan will not be much help. This issue must be addressed first (see step three)
- The leniency of individual creditors – contact individual creditors and lenders first to see if they can lower the monthly payments or interest, waive certain fees, or change the monthly due date. Debt settlement companies could also help with this.
Cut Spending (In These Three Areas)
Stuart Simonsen bankruptcy advisor suggests paying down debt and avoid bankruptcy, it is crucial to cut expenses and create a budget. Instead of pinching pennies, target the three largest expenses in the American household.
In 2020, almost half of American renters spent 30% or more of their income on housing. Think about renting rooms in the home, renting out a garage or backyard space for storage, or moving to a less luxurious yet cheaper neighborhood to save every month.
Stuart Simonsen bankruptcy advisor says that those making high monthly car payments on a new or almost-new vehicle may consider reselling it and using cash to buy a reliable, older used car. Cars should safely transfer the driver from point A to point B, not from home to work to more debt.
According to the BLS, the average household spends $3,500 annually on dining outside of the home. This amount could instead cover a large portion of a used vehicle, a few mortgage payments, or almost four months’ worth of groceries for a family of four.
Changing spending habits is hard work, and it may take months or years to feel financially stable, even with a solid repayment plan. Stuart Simonsen fraud expert says that there is a limit to how much someone can cut back, but there isn’t a limit to how much a person can earn.
Consider the following – temporarily or long-term – to gain a financial safety net.
- Picking up extra hours, shifts, or overtime at a current job
- Taking certification classes through a job to work toward a promotion
- Self-teaching a new skill is also possible with today’s technology
- Starting a side business
- Working in the gig economy on weekends or as time allows (freelancing, driving for Uber, babysitting, pet sitting, food delivery, etc.)
Connect with a Free Credit Counselor
Stuart Simonsen fraud expert says that for anyone feeling overwhelmed with their financial situation, a helping hand is only a phone call away. According to the Consumer Financial Protection Bureau, plenty of free, non-profit credit counseling organizations are available to help advise on budgeting, debts, and money management.
Certified counselors from these organizations look at client documentation to come up with budgets, organize debt management plans, and more. Negative financial feelings don’t need to take root – reach out to a credit counselor today and breathe a little easier tomorrow.