"Twenty pounds a year in income and nineteen pounds, nineteen shillings, and six pence a year in spending means happiness. Twenty pounds a year in income, twenty pounds and sixpence a year in expenses ". Mr. Micawber's comments about debt are just as true now as they were when Dickens wrote them, maybe even more so now that credit cards are so popular. Like Mr. Micawber, we might try to make ourselves believe that "something will turn up" by wishing for it.
In reality, though, we all know that debt problems have to be dealt with sooner or later, and the sooner the better. We might not go to debtors' prison for consumer debt anymore, but that doesn't mean we should think fixing our credit or filing for bankruptcy is easy. No matter what you choose, self-help or a credit lawyer, you have a long way to go. It's best to face this truth right away.
It's a little bit misleading to say that the only ways to deal with debt are self-help or legal help. Whether or not you hire a lawyer, you still need to help yourself by admitting to bad spending habits and bad budgeting. You have to take the hit, and the first and most important step is to take responsibility for where you are. Second, if you want to stay out of court, you'll need to make a budget plan, which, unlike paying a lawyer, won't cost you much. For a small fee, you can hire the help of nonprofit organisations that will be more than happy to help you make a plan. You don't have to feel like you're alone in your fight.
But maybe you're good at helping yourself, and you want to get out of your financial mess by using your skills to make a budget plan for yourself. You can now easily get software that will help you start budgeting your money so that you can start fixing your credit. Being proactive is the best way to set yourself up for short-term and long-term financial health. You are taking back control of your life. Remember that your flexible friend will only help you stay fit so you can spend more than you can afford. If you want to keep your finances in good shape, you should live within your means and follow the strict rules of a budget plan.
Living within your means sounds like a good idea, but if you really want to help yourself, you should live well below your means. Why? Just because you want to fix your credit as soon as possible, and you can do that by paying off as much of all your debts as you can at once. Paying each company you owe money to a small amount every month is a good start. This shows your commitment and protects your position so that you don't have to go to court. But interest is added to some debts, so each month you pay off less of the principal. If you pay more each month, your creditors will see you in a better light and you will be able to fix your credit faster.
It sounds like a good idea to live below your means, but how do you do it? In reality, there is no gain without pain. If you have a lot of debt, you may have to make some pretty big changes to the way you live. You may have gotten rid of your credit cards and cut back on your spending, but you still have a long way to go if you want to be considered a serious self-helper. Getting a second job is one way to make more money. You could also sell your home and move into a rental. These could be very stressful changes to make to your life, but going bankrupt is hardly a stress-free alternative.
You might think, though, that the only way out of your debt is to file for bankruptcy and that there is no other way out. At this point, it might seem like you need to hire a credit lawyer to protect your rights, especially if your debt is big and your case is complicated. Before we talk about the pros and cons of doing this, it's important to note that new laws have just been passed that make it much less likely that you'll be able to file for bankruptcy. Based on how things are going now, it will likely not be easy for anyone to file for bankruptcy for a long time.
The bankruptcy laws in the US are getting stricter, which seems to be different from what seems to be happening in the UK. In the UK, "honest" first-time bankrupts now only have to go bankrupt for one year instead of three or two. For people who have gone bankrupt more than once or who got into trouble because of their own carelessness or fraud, the bankruptcy period has been extended to at least five years. So, the goal is to get financial institutions to give first-time bankrupts a fresh start by making it easier to get credit after bankruptcy. On the other hand, people who go bankrupt over and over again have to face how bad their actions are.
But back in the US, tightening the rules on who can file for bankruptcy raises the question of whether you should help yourself or hire a credit lawyer. If you choose to help yourself, you might be doing yourself the best thing you could. If the law makes it harder and harder to file for bankruptcy, there doesn't seem to be any other choice but to use a budget plan like the one described above. When things get harder and harder, people who can keep going do.
On the other hand, if you hire a credit lawyer, you could use the knowledge of an experienced lawyer to make sure you qualify for bankruptcy. Credit lawyers would say that their experience and in-depth knowledge of bankruptcy law could be very helpful in situations like reaffirmation agreements, which let you keep your home or car as long as you keep making payments on them. Because they are secured loans, this is possible. Experienced bankruptcy lawyers know the difference between secured and unsecured loans and how important it is to the debtor. They use this knowledge to their clients' best advantage.
So, do-it-yourself or hire a lawyer? On balance, self-help is the best option, since you are the one who caused the problem and must be the one to fix it. With bankruptcy laws getting more and more strict, self-help can only become more important. As a last resort, though, it might be best for your interests to talk to a lawyer. But only you can keep your spending to "nineteen pounds nineteen and sixpence" per year.
