Many Americans struggle with debt, but according to attorney Nicholas Hicks, bankruptcy doesn’t have to be your only option.
When people think of bankruptcy, they often assume it’s from overspending. Nicholas Hicks, an attorney specializing in debt relief, explains that, more often than not, debt is actually the result of uncontrollable circumstances. Research has found that medical bills are surprisingly the number one cause of personal bankruptcies. Additionally, families must manage credit card debt, student loan debt, and a mortgage.
Filing for bankruptcy comes with severe consequences for your credit score, and can even result in the loss of property. Attorney Nicholas Hicks notes that it should only be used as a last resort. He offers four tips to help you avoid bankruptcy and get on the right path.
- Cut Expenses
Your first goal should be to make a budget and eliminate unnecessary spending. Attorney Nicholas Hicks notes that the process will require making sacrifices such as cutting out entertainment, unnecessary clothing, eating out, and more. Put aside as much as possible to use towards paying down your debts.
It may also be wise to downsize into a smaller home and find more affordable transportation options. If you are struggling to pinch pennies, Nicholas Hicks recommends reaching out to a credit counselor for help with making a budget.
- Negotiate with Creditors
It is not wise to avoid contacting your creditors. As soon as you realize your monthly payment obligations are no longer possible, see if your creditors can make adjustments by reducing interest rates, changing payment terms, or reducing fees. Attorney Nicholas Hicks notes that creditors would rather have small payments than no payments at all, however don’t expect them to negotiate twice.
- Avoid Debt Consolidation
At first glance, a debt consolidation loan sounds like a dream come true. All of your debts are combined and paid with one monthly payment. Attorney Nicholas Hicks tells his clients to be wary of these loans, however. Over time, you’re more likely to pay higher interest rates and accumulate more fees, which adds to your problem. Plus, you risk losing your home if you borrow against it to consolidate debts.
- Consider Debt Management Services
If you are not able to sort everything out on your own, it may be wise to seek debt management services offered by non-profit organizations. Attorney Nicholas Hicks notes that this is not the same as debt settlement services, which are provided by for-profit companies and should be avoided at all costs. Debt settlement services have been proven to not give the clients any significant relief from debt, and instead can contribute to their burdens.
Attorney Nicholas Hicks, in some cases, recommends debt management services instead of bankruptcy because agencies negotiate with creditors on your behalf and distribute your payments for you. Plus, their fees tend to be much lower at around $25 per month. Most non-profits will not turn you away for not being able to pay, so always seek professional help if you need it.
It’s essential to keep in mind that every person’s situation is entirely different. Some methods that may work for you won’t work as well for others. Attorney Nicholas Hicks suggests thoroughly considering all options before deciding on a debt management plan.
About Lawyer Nicholas Hicks:
Nicholas Hicks was rescued from NYC foster care as a child at the age of 5 years old. Lawyer Nicholas Hicks attended both public and private schools where he eventually graduated from ECC, UB & UB Law School. He specializes in various areas of practice, including injury cases, debt elimination, criminal defense, divorce, child support, child custody, and more.