Bankruptcy & Debt: How to Pay Down Unsecured Debt
TRI Writer • September 18, 2020
Many Americans struggle with debt, overwhelming bills, and a never-ending struggle to pay off their debt. If you are trying to get debt-free, consider these tips.
Tools and Tips for Paying Off Debt :
- Identify Your Debt: The first step to take when trying to get out of debt is to get to know your debt. Ensure you are aware of every account’s balance, terms, monthly payment, fees, and payoff amount. There are many free apps and budget services that can assist consumers who want to keep track of their debt and see payments, balances, etc. in one place.
- Make a Pay Off Plan: After spending the time to get to know your debts, decide on a strategy. For instance, one popular and effective strategy is the Snowball Strategy. If you choose to use this strategy, you identify how much you can pay towards debt each month, then make the minimum payments towards all the accounts, except the account with the smallest balance. After making your minimum payments toward the other accounts, pay the all you have left towards the account with the smallest balance. This method allows you to quickly pay off one account, meaning you now have one less “minimum monthly payment” to make. Each time another “smallest” balance is paid off, the amount of money you can put toward the next “smallest balance account” increases because you have fewer minimum payments. This is just one example of a debt payoff strategy; there are many other options. The important thing is to pick one, so you have a plan.
- Stick to It: Once you identify a plan, don’t make exceptions or veer off course. For your get out of debt payoff plan to work, you have to follow through.
- Check Your Monthly Bills: To make your debt payoff strategy as effective as possible, look at your other monthly bills. If you can cut back in any other areas, you will increase the amount of money you have to put towards your debts, and putting more towards your debt means paying it off faster.
- Make More Money: After minimizing your expenses, you can consider whether you have many opportunities to make more money. Making more money is the other way you can have more funds to pay off your debt. Is there a freelance job you can pick up?
If getting to know your debts during step one leaves you stumped because you don’t have enough money each month to cover your bills, you may benefit from another option. When consumers are so buried in debt that they cannot afford to make their payments and have no hope of paying the debt off, bankruptcy offers legal protection and debt discharge.
If you cannot get out of debt and need to file bankruptcy, call Ken Rannick at Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.
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Struggling with debt? Learn seven key signs that it might be time to consider bankruptcy. Kenneth C. Rannick P.C. offers legal guidance to individuals in Chattanooga ready for a financial fresh start.
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Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses? In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.