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Top 7 Strategies for Handling Debt before You File Bankruptcy

Updated on March 14, 2013

Handling Debt before Bankruptcy

If unmanageable debt is taking over your life, don't feel alone. Thousands of consumers are struggling with debt and many of them turning to bankruptcy as a solution.

Bankruptcy doesn't happen overnight, though, especially if you need time to save money to pay your bankruptcy lawyer or to gather information for the necessary paperwork. In the meantime, you still have creditors harassing you. There are steps you can take to avoid problems from your creditors while you are moving towards a fresh financial start.

7. Verify your debts

Sometimes one company sells another company accounts or some companies turn them over to collection agencies.  Either way, you have the right to ask for documentation proving you are responsible for that debt.  Your Minnesota bankruptcy attorney can help you minimize harassment from creditors.

6. Don't give out personal information

Never give a creditor personal information that would give them access to your bank account.  Nor should you give them the name of your employer if they don't already know it. 

5. Keep track of communications with creditors

Keep records of all calls to and from creditors or bill collectors.  Write down the date, the name of the agency and the caller and the company's address.  You are legally allowed to send a letter to a third party agency and request them to stop calling you.

4. Don't agree to unreasonable payment plans

One of your creditors may offer you a plan with low payments, but remember, you have more than one creditor.  Unless you can make a workable arrangement with each of them that will keep you out of bankruptcy, don't make payment arrangements with any of them.

Debt Management Tips: How to File Bankruptcy

3. Avoid third party collection agencies

When your account is delinquent for 90 days or more, many companies turn it over to a collection agency. Sometimes employees from collection agencies can be rude or even threatening.  You have no legal obligation to speak to anyone from that agency. Treat them with respect, but if you do not get the same respect in return, terminate the call.

2. Face your debt

Hiding from your creditors can be more stressful than picking up the phone and telling creditors that you are having financial trouble. Creditors are often more willing to work with you if you are honest.

1. Call your creditors

Call your creditors and tell them you are in a financial bind. If you are confident you are going to file bankruptcy, tell them so and give them the name of your bankruptcy lawyer. Even if you do not yet have a petition number, many creditors will put a hold on the harassment for a short time while you make your arrangements.

If you are thinking of filing bankruptcy, consult a bankruptcy attorney for answers to your questions. He is knowledgeable of current Minnesota bankruptcy law and will be able to guide you in the right direction and help you find a solution to your financial crisis.

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