Delaware law mandates that if you file for bankruptcy, you must work with a credit counseling agency approved by the U.S. Trustee in Delaware within the six months before you file. In addition, you will be required to take a debtor education course before your bankruptcy is discharged. As you work through your course and with a credit counseling agency, you will likely be asked to come up with a debt payment plan.
Even if you are not planning on filing for bankruptcy, having a debt plan for your family or yourself can help you get out of debt. Anyone who owes money will want to work out an actionable, written plan as a roadmap to paying off the money owed in the most expedient way possible.
Setting Up Debt Payment Plans
You can find payment plan templates online or through credit counseling agencies, but in many cases you can best create a plan by customizing it yourself. Whether you need a plan to pay back credit cards, student debt, tax debts or something else, having it all written on paper can help. You can create a plan with these steps:
1. Review Where Money Is Coming In
List how much income and money you have coming in from other sources.
2. Calculate Fixed Costs
Identify all the costs you have which stay the same each month. This may include utilities, payments on loans and other recurring expenses like rent, insurance or cell phone data.
3. Calculate Variable Costs
Identify and list all the costs you have which change from month to month. This can include your grocery costs, for example.
4. Identify Monies Owed and Prioritize Them
List all the debts you have. Beside each debt, list how much you owe, what the monthly or minimum payment is and when the payment is due. Then, go through the list and determine which debts you want to focus on paying off first.
If you have a credit card with a high interest rate, for instance, it can make sense to target that one first, since you are paying the most for the privilege to borrow. Any extra money can go towards that bill while you work on keeping the rest of your debts current. Once you can cross that credit card off your list, you can move your focus to the next debt until everything is repaid.
5. List Ways to Reduce Costs and Increase Income
If you are struggling to repay what you owe or feel like you are having a hard time getting out of debt, you will need to find extra money to put towards your debt until everything is paid off. To do this, you will need to increase what you bring in and reduce what you spend.
You can increase income by selling some assets or taking on a second job. You can reduce what you spend by looking at your variable and fixed expenses. Try to eliminate some costs — such as unnecessary subscriptions — and put the money you save towards paying off your debts.
6. Create a Budget
A budget pulls your plan together and makes it actionable. List what you will be bringing in each month and what you need to spend each month on your bills. Identify the money you have coming in and the savings you can apply to your debts so you know how much you can put towards each bill every month. Post your budget somewhere you can see it so you know what to pay and when. Use a calendar to identify when bill payments need to be made.
If you create your plan and realize you cannot meet your financial obligations on what you earn, even after you remove the non-essential spending from your budget, you may want to speak to a credit counselor or a bankruptcy lawyer in Delaware to talk about ways to get a fresh financial start. If you’d like to get started today, contact Doroshow, Pasquale, Krawitz, and Bhaya for a consultation.