By Cara O'Neill, Esq.

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If you feel like burying your head in the sand, you’re not alone. Everyone wants to when overwhelmed with debt. But everyone also knows that doing so doesn’t help and that eventually, the question of “how do I get out of debt” must be answered. The good news is that all debt problems can be solved and moving towards the solution can be as easy as looking at the problem.

1.  Face Your Debt

There’s no way around it -- it takes a lot of money to live and when we do our budgets, it’s easy to forget some of the sneakier expenses like oil changes  and co-pays. As such, the first order of business is to really look at how much it takes to run your life.

An easy way to do this is by using Gail Vaz-Oxlade’s online interactive budget worksheet. All it takes is plugging in your income and household expenses and in a matter of minutes, the realities of your financial situation are revealed.

2.  Review Your Property and Expenses

The next order of business is to evaluate your property. Do you have any unnecessary property that you can sell to pay off your debt? Can you sell property to rid yourself of monthly payments? Can you lower your cable payment or get rid of a storage facility? Trimming down in every area possible is important because these small expenses add up.

Caveat: Generally, it is a bad idea to dip into your retirement since it can almost always be protected in bankruptcy. Therefore, it is important to get professional advice before doing so.

3.  Decide What It Means to You

After doing the budget worksheet and evaluating your property, if you’re like most people, the result is no surprise – you’re underwater. But now you know the extent of your debt problem and can assess whether you can get out of debt yourself or whether you should consider bankruptcy.

If after selling property and minimizing bills you don’t have enough money each month to pay credit card debt, or only have enough to pay the minimum payment each month, you should consider filing bankruptcy. If, however, you can pay more than your monthly credit card payments each month, then you may be able to adjust your expenses and avoid bankruptcy all together.  

Attorney and author Cara O'Neill, Esq. has practiced law for 18 years and currently maintains a bankruptcy practice.

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