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Debt: Self-Help Or A Credit Lawyer?
By: Maureen Cook
Annual income twenty pounds, annual expenditure nineteen pounds nineteen
shillings and sixpence, result happiness. Annual income twenty pounds, annual
expenditure twenty pounds and sixpence, result misery”. Mr. Micawber's remarks
on debt remain just as true today, perhaps more so with the explosion of credit
cards, as they did when Dickens wrote them. We might, like Mr. Micawber, indulge
in wishful thinking and try to convince ourselves that “something will turn up”.
In reality, though, we all know deep down that sooner or later debt problems
have to be faced, the sooner the better. Nowadays we might not face debtors'
prison for consumer debt, but we should not fool ourselves either into thinking
that credit repair or filing for bankruptcy are easy options. Whichever you
choose, self-help or credit lawyer, the road ahead will be a long one. It's well
to face this fact at the outset.
Presenting the options for dealing with debt as a stark choice between self-help
and legal relief is a bit misleading. In truth, whether you seek a lawyer or
not, you still need to help yourself by acknowledging bad spending habits and
poor budgeting management. You must bite the bullet, and the first very
important step to take is to take responsibility for the situation you find
yourself in. Second, if you want to avoid the courts, you'll need to set up a
budget plan which, unlike lawyers' fees, will cost you very little. For a small
fee you can enlist the services of nonprofit organisations which will be only
too willing to give you assistance in drawing up a plan. You don't have to feel
you're fighting a lone battle.
But perhaps you're a natural self-helper, and you want to get yourself out of
your financial mess by using your skills to draw up a budget plan yourself.
Software programs are now readily available which will enable you to begin
budgeting your money with a view to repairing your credit. Being proactive is
the best way to build solid foundations for fiscal fitness in the short and
long-term: you are retaking control of your life. Remember: your flexible friend
will only keep you fit to live beyond your means. If you want to keep fiscally
fit, stick rigidly to living within your means and the strict discipline imposed
by a budget plan.
Living within your means sounds very laudable, but real self-help should mean
living below your means, well below. Why? Simply because you're looking to
repair your credit as soon as possible, and you can achieve this by paying off
as much as you possibly can on all your debts simultaneously. Paying off a small
amount monthly to each company you owe money to is a good start, showing both
commitment on your part and a safeguarding of your position to ensure you don't
face court proceedings. Some debts, however, gain interest and you're therefore
paying off less of the principal each month. Increase your monthly repayments
and you put yourself in a good light with your creditors as well as working
towards an earlier credit repair.
Living below your means: sounds a good idea but how is it done? Realistically,
If there's no pain there's no gain. Changes in your lifestyle have to be made,
some quite radical, particularly if your debts are substantial. Of course, you
will have got rid of your credit cards and curtailed your spending habits, but
you'll need to go much further if you're to count as a serious self-helper.
Raising your income by taking on another job is one option. Selling your home
and moving into rental property is another. These potentially are very stressful
lifestyle changes, but the alternative of bankruptcy could hardly be described
as stress-free.
You might feel, though, that filing for bankruptcy is the only way forward and
that your debt situation is intractable. At this point hiring a credit lawyer
might seem necessary to protect your interests, particularly if your debt is
very large and your case complex. Before we look at the pros and cons of taking
such action, it's worth pointing out that new laws have recently been introduced
which make qualifying for bankruptcy anything but a foregone conclusion. On
current trends, we're likely to reach the stage quite soon when it will become
very difficult for anyone to file for bankruptcy.
This tightening of the bankruptcy laws in the US seems to contrast with the
apparent liberalization of UK bankruptcy law. In the UK the period of a
bankruptcy has shortened from three or two years to one year for 'honest',
first-time bankrupts. For serial bankrupts, and others who have contributed to
their plight through neglect or fraud, the period of bankruptcy has been
lengthened to a minimum of five years. So, for first-time bankrupts, the aim is
to encourage financial institutions to give first-timers a fresh start by easing
credit restrictions post-bankruptcy. By contrast, serial bankrupts are made to
face the seriousness of their delinquent actions.
But returning to the US, the question that tightening the rules on bankruptcy
qualification throws up is, do you go for self-help or a credit lawyer? Opt for
self-help and you could be doing yourself the best possible favor. If the law is
going to make it increasingly difficult to file for bankruptcy then there seems
no alternative but to implement a budget plan as outlined earlier. When the
going gets tough, and tougher, the tough get going.
On the other hand, opt for a credit lawyer and you could benefit from an
experienced attorney's expertise to secure your bankruptcy qualification. Credit
lawyers would argue their experience and detailed knowledge of bankruptcy law
could prove invaluable in matters like reaffirmation agreements where you'll be
able to keep your residence or automobile by continuing to make payments on your
home or car. This is possible because they are secured loans. The distinction
between secured and unsecured loans, and its importance to the debtor, is well
appreciated and used to best advantage by experienced bankruptcy lawyers.
So, self-help or credit lawyer? On balance self-help, because, as the person who
created the problem, you must utimately be the one to restore your fiscal
fitness. With the increasingly draconian nature of bankruptcy law self-help can
only assume greater importance. As a last resort, though, seeking legal counsel
might best protect your interests. But only you hold the key to keeping your
annual expenditure down to “nineteen pounds nineteen and sixpence.
About the Author:
If you would like to see more about getting out of debt, click the link, or
paste into your browser: http://www.lawyers.myknowledgevault.com
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