Bankruptcy can assist people and businesses who have more debt than they are able to pay back. By selling off their assets to pay off their debts or by coming up with a repayment plan, people who are unable to pay their creditors can get a fresh start thanks to bankruptcy laws.
If you are facing bankruptcy (or think you’re going to), it’s important to take a proactive approach and see what you can do to alleviate your situation.
To that end, below is a brief guide on navigating bankruptcy in New Orleans.
Get Educated
Before you can receive a bankruptcy discharge, you must complete a debtor education course. This is because to qualify for Chapter 7 or Chapter 13 bankruptcy, you must demonstrate that you received credit counseling from an agency approved by the US Trustee in Louisiana within the six months preceding your filing.
Make sure to also conduct a means test: according to bankruptcy law in New Orleans and Louisiana, you must compare your income to the median income for a household of your size. If your income is less than the median, you may file for Chapter 7 bankruptcy, and if you choose to file for Chapter 13, you may be eligible for a three-year repayment plan.
Consolidate Existing Debt
Debt consolidation, which involves paying off high-interest debts with a single lower-interest loan, is frequently mentioned as a way to avoid bankruptcy. However, it is important to see this as a long-term strategy rather than a quick fix: some people get tempted to go on spending sprees once the pressure to pay off debts is no longer there.
Debt settlement is also a possibility. Instead of reducing the number of creditors, the debt relief company negotiates with those creditors to reduce the amount of your debt.
With debt settlement, the idea is that creditors will end up forgiving your debt altogether if you pay a portion of each debt upfront. This is because they would rather get paid a little bit rather than not at all. These two strategies each have advantages and disadvantages, so weigh them carefully before deciding on one.
Decrease Your Spending to Avoid Bankruptcy
Making a budget is the quickest and easiest way to gain control of your spending habits.
You should also make sure to pay in cash for all purchases, whether it’s actual cash or a debit card or smartphone linked to a cash account. It’s best not to cancel your cards because you’ll reduce your credit limit and immediately increase your credit utilization ratio, both of which are bad for your credit rating.
Below are some other compromises you may need to consider to decrease your spending:
- Relocate to a more affordable home
- Cancel as many memberships and subscriptions as you can
- Opt to drive an older car
Increase Your Income
While cutting down on spending is important, you’ll also want to maximize your income sources if you want to get out of bankruptcy fast in New Orleans.
You might want to consider taking on a second job, or even a third if you really need to. This rule also applies to your spouse or significant other. This may appear harsh, but if you are on the verge of declaring bankruptcy, you must act decisively. Look for side jobs during difficult economic times.
Of course, you’ll also want to consider selling your things to add more income to your bank account. In line with the previous tip, you might want to sell your home or car before finding cheaper replacements for both. These big ticket items may help offset some of your spending.
Ready to Sell Your Home to Avoid Bankruptcy?
If you’re thinking about declaring bankruptcy, planning to sell your house fast in New Orleans is an option you should consider. While the thought of finding a realtor, marketing your house, and organizing showings may be a turn-off, a cash offer gets you the money you need quickly.
Once you’re ready to reach out to a cash home buyer in New Orleans LA, give us a call. Our team at Albatross Home Buyers will answer any questions you have about our buying process, so call our customer service hotline at +1-504-517-3956.