Debt can quickly become overwhelming and leave you feeling stressed. In a world of high interest rates and exorbitant late fees, it’s not uncommon for debt to double or triple by the time it’s paid off. Minimum debt payments may keep your head above water, but this often eats up your disposable income and means additional years of paying off debt. Talking about debt is considered taboo, even though nearly everyone has some form of debt. This often leads to people feeling as if they can’t get help until it’s too late. Waiting until the last possible moment to seek out help could mean that you’re trying to pay off debt with no money and bad credit. Other people may say this is impossible, but the attorneys at O’Bryan Law Offices don’t deal in impossibilities.
At the O’Bryan Law Offices, we can show you how to get out of debt with no money and bad credit. Our Kentucky attorneys can help you figure out the best course of action for your financial situation. We’ll answer some common questions and go over the options available to you. For more information about how we can help, call us today at (502) 400-4020.
How Can I Pay My Debt if I Live Paycheck to Paycheck?
Living paycheck to paycheck is something millions of Americans struggle with. With very little money left over after bills and necessary living expenses, it’s almost impossible to save money or pay off debt as quickly as you want. Some people swear by the debt snowball or debt avalanche methods. The debt snowball method involves paying off the debt with the lowest balance first, and then snowballing those payments to the next largest debt and so on. The debt avalanche method involves paying off the debt with the highest interest rate first.
Both of these methods can help you pay off debt faster, but this can seem impossible when all your money is going towards bills and other expenses. Minimum payments on each debt can keep you in debt for years to come. Unexpected expenses like medical bills can mean skipping other bills while you struggle to stay afloat. What happens if you can’t pay these extensive debts?
What Happens If I Can’t Pay My Debt?
When you take on any kind of debt, you are legally obligated to pay it back. Missing a payment here and there or paying it after the due date may not seem like a big deal, but these delinquencies have major consequences. All late payments appear on your credit report and can have a major negative effect on your credit score. Late credit card payments are often subject to high fees, which means more money that doesn’t go toward paying down your debt balance. Not paying your debts can also mean harassment from creditors.
Creditor harassment can come in the form of repeated phone calls and letters from debt collectors. Extensive non-payment can result in your account being sent to collections. Debt collection agencies have an endless supply of people whose sole job is to call debtors. Being sent to collections can also leave an ugly stain on your credit report that lasts for seven years. Fortunately, you have a few different options for repaying debt. At O’Bryan Law Offices, our dedicated attorneys can help you determine the best option for your situation.
Debt Restructuring
Debt restructuring is a way to pay off some forms of debt by negotiating with creditors. An experienced restructuring attorney can help you restructure your debt to make the debt more manageable. This could include lower monthly payments, lower interest rates, or a debt reduction. Sometimes a loan modification is necessary to help people get back in control of their finances. Other debt settlement agencies often make promises that they can’t keep.
They may claim that simply by negotiating with your creditors, they can wipe out your debt–for a small fee, of course. These debt settlement agencies are often untrustworthy and scam hard-working people out of their money. At O’Bryan Law Offices, our board-certified attorneys are experienced in creditor negotiations. We can help you restructure your debt and learn good credit habits to make sure you can stay ahead of your debts.
Debt Consolidation
Another option for immediate debt relief is through a debt consolidation loan. These personal loans combine small debts that often have high interest rates into one monthly payment at a lower interest rate. Debt consolidation loans can decrease the chances of missed and late payments as well, since there’s only one payment date to remember. Unfortunately, debt consolidation loans are not an option for everyone. These loans often have credit score requirements.
Additionally, debt consolidation for medical bills and other debts may actually leave you in a worse financial situation than when you started. It’s important to speak with a debt consolidation lawyer about your options before making a decision.
Can a Bad Credit Score Prevent Me From Getting a Debt Consolidation Loan?
Every lender looks at your credit score and credit history. If you have multiple delinquent accounts and a history of missing payments, you likely won’t be able to qualify for much credit. A debt consolidation loan is a type of personal loan, so you still have to meet basic requirements to qualify. Bad credit scores can easily disqualify you from getting a debt consolidation loan. If you have a bad or low credit score, you still have options available! Working with a qualified bankruptcy attorney from O’Bryan Law Offices can help you explore bankruptcy as a debt-relief option.
Benefits of Bankruptcy
Many people think of bankruptcy as an absolute last resort that has detrimental effects. This is often not the case. While bankruptcy does impact your credit score, so do late payments and failure to pay your debts. Bankruptcy has many benefits available to help you get back on your feet and learn credit habits that can help you in the long run. Bankruptcy can help save your home, stop wage garnishment, and even eliminate unsecured debts like credit card debt and medical debt.
Once you file bankruptcy, you have the protection of an automatic stay. This means that creditors are legally barred from contacting you about delinquent debts. When debtors use bankruptcy in a timely manner, bankruptcy can even help increase your credit score. The two most common types of bankruptcy available to consumers are Chapter 7 and Chapter 13. Read on below to find out the differences between the two.
Chapter 7 Bankruptcy Can Make Your Debt Disappear
Chapter 7 bankruptcy is also called liquidation bankruptcy. With this form of bankruptcy, your assets are liquidated (sold) by a bankruptcy trustee and used to pay off your creditors. This is the most common form of bankruptcy for consumers. Using Kentucky bankruptcy exemptions, many people can often keep most of their assets but have their unsecured debt wiped out. Chapter 7 bankruptcy can discharge the following debts:
- Credit card debt
- Personal loans
- Mortgage and car loans
- Medical bills
Chapter 7 cannot discharge tax debt, child support, or student loan debt. Chapter 7 is a popular filing option because unsecured debts can often be wiped out with little to no payment made to your creditors. See if you qualify for Chapter 7 bankruptcy with the Kentucky means test. Chapter 7 bankruptcy offers the most complete relief, but not everyone qualifies.
Chapter 13 Consolidates Your Debt Into Easy Monthly Payments
For people who don’t qualify for Chapter 7 bankruptcy or want to keep more of their assets, Chapter 13 may be the better choice. Chapter 13 bankruptcy involves creating a debt management plan where you pay back a portion of your debt to creditors over the course of three to five years. Chapter 13 takes all of your monthly debt payments and combines them into one monthly payment to pay off debt.
This form of bankruptcy can stop you from losing your home and car, and even extend the repayment period for tax debts and student loans. You may have to stick to a strict monthly budget, but Chapter 13 bankruptcy can mean you only pay a small percentage of your original debt. After the three to five-year repayment period is over, the rest of the debt is discharged and you no longer have an obligation to pay it.
Don’t Trust Common Bankruptcy Myths
If bankruptcy is such an efficient option for debt relief, why aren’t more people filing for bankruptcy? Many people consider bankruptcy a last possible resort to debt relief. In some cases, people wait until the last possible moment to file bankruptcy or take a DIY approach to it and end up in a worst-case scenario. Many people incorrectly assume that you can only file bankruptcy once in your lifetime, or that you risk losing everything. These common myths are just that–myths.
My Credit Score Will Drop and I Won’t Be Able To Get It Back Up
After filing bankruptcy, your credit score takes a huge hit. Many people report seeing a drop of up to 200 points. For many people, this plunge is too great of a risk to take, so they avoid bankruptcy until they are out of other options. Trust us when we say that this drop isn’t as bad as people think it is. If you’re struggling to keep up with debt, your credit is likely on the downward trend already. Your credit score is based on a mix of payment history, credit utilization, age of accounts, and type of credit.
If you are struggling to make the minimum payment or missing payments, your credit score will take a major hit. Filing for bankruptcy sooner rather than later can protect as much of your credit score as possible. After filing bankruptcy, the credit counseling attorneys at O’Bryan Law Offices can help you restore your credit.
I Won’t Be Able to Get Any Credit Again
This is another common myth surrounding bankruptcy. A bankruptcy filing may stay on your credit for a number of years, but it in no way prohibits you from getting a credit line in the future. You may not be able to keep your current credit cards, but you can easily apply for new credit cards after filing bankruptcy. The interest rates may be a little higher than you’d like them to be, but good credit habits can make repayment simple.
O’Bryan Law Offices Can Help You Every Step of the Way
The experienced bankruptcy lawyers at O’Bryan Law Offices can help you through every step of the bankruptcy process. From pre-bankruptcy counseling services to life after bankruptcy, we have all the bases covered. Our clients are more than just another number to us. We take pride in helping families and individuals get debt-free and learn better credit habits for the future.
Credit and Debt Counseling Services
Did you know that the O’Bryan Law Offices is also a credit counseling agency? We offer consumer credit counseling services to help you stay on top of your debt and make the best choices for your situation. Sometimes our clients can avoid bankruptcy with the help of our experienced credit counselors. A credit counselor will show you the best ways to budget and manage your finances to avoid getting crushed under a mountain of debt.
Choosing the Best Option For Your Financial Situation
Chapter 7 and Chapter 13 bankruptcy are both effective debt-relief options, but how do you know which one to file? At O’Bryan Law Offices, our attorneys can help you figure out the best option for you. Someone with more unsecured debts may benefit more from Chapter 7 bankruptcy, while Chapter 13 can help save more of your assets. Our attorneys will help you figure out which chapter is right for you.
Credit Restoration Services
After filing bankruptcy and getting control of your debt, our team can help you begin the process of restoring your credit. We can help you monitor your credit and make sure you’re doing everything you need to do to build the score back up. We can even help you request free credit reports. We help you learn how to monitor your debt pay-off progress and make solid financial decisions.
Getting Out of Debt is Hard Work–But the Bankruptcy Attorneys at O’Bryan Law Offices Make It Easy
The Kentucky bankruptcy attorneys at O’Bryan Law Offices have been helping families get out of debt for decades. We can help you get out of debt and stay debt-free. We know that overwhelming debt can take a toll on your mental health and cause undue stress. The bankruptcy lawyers at O’Bryan Law Offices are ready to help. Contact us for more information about how we can help. Call us today to schedule a free consultation with an experienced debt relief attorney at (502) 400-4020.
