When financial difficulties start slowly taking over your life, you may face a number of tough decisions. They often come down to either working more, maybe a second job, to pay off debt or filing bankruptcy for a fresh start. Both options have advantages and disadvantages, and they affect your life and finances in very different ways. There’s no one-size-fits-all answer—you’ll need to consider a variety of factors and make the best choice for you and your family.
Wondering if bankruptcy is the right choice for you? It’s time to talk to Padgett & Robertson to learn more about if you qualify and how bankruptcy may affect your credit. Give us a call at 251-336-3695 to set up a time to talk now.
Take a Realistic Look at Your Financial Situation
Before you make any decisions, you’ll need to take a hard look at your financial situation. This is often the hardest part for people. When someone’s caught up in serious debt, they often put off looking at the actual numbers. It’s a lot to take in, but once you know what you’re working with, you can start taking steps to improve your situation.
Conduct a budget analysis. You’ll want to write down everything that you bring in and everything that you pay for, including food, gas, entertainment, and other variable expenses. This will let you know how much free money you have every month that you could put toward debt.
Additionally, you should write down all of your debts, the total amount owed, the monthly payment, and your interest rate. You can use different calculators and spreadsheets to see how long a full payoff would take.
If you have any assets you’ve been hanging onto for a rainy day, this may be the time to tap into them. Look at anything valuable you may have and think about whether or not it would help you in your journey to zero debt.
Considerations Involved with Taking a Second Job
If you’re considering taking a second job, you can use your budget analysis to determine how much of a difference additional work would make. Calculate how much you would earn if you took on another job. Don’t forget to account for taxes and the costs associated with a second job.
For example, a second job may mean ordering takeout more often or spending more on gas. If a second job pushes you into a different tax bracket, any money you earn above your old tax bracket could be taxed at a higher rate. You can then use your debt calculator to figure out how much more quickly you could pay off debt with a second job—and how long you’d need to work a second job.
You’ll also need to weigh the non-financial costs of a second job. Working more than full-time can be incredibly mentally, physically, and emotionally draining. It taps into your social life and often means taking a few days off. If you have children, there’s no way to get around the fact that a second job will take you away from your children more often. Yes, paying off debt is important, but so are your physical and mental health.
Exploring Bankruptcy as an Option
Now that you know what life will look like with a second job, it’s time to think about how bankruptcy could affect your life. To start, the timeline for bankruptcy is generally much shorter than the amount of time you’d spend paying off your debt in full.
Many Chapter 7 cases are completed in about six months. You could be debt-free (with some exceptions) and avoid the demands of a second job. However, bankruptcy comes with a cost. Your credit will likely take an immediate hit when you file, and the bankruptcy will remain on your credit report for years to come. If buying a new car or home is in the near future, the decrease in your credit score may not be worth it. The good news is that you can often begin rebuilding your credit as soon as your bankruptcy is granted.
Discuss Your Legal Options with Padgett & Robertson
Wherever you are in the decision-making process, the team at Padgett & Robertson is here to help you choose your next step. Fill out our online form or call us at 251-336-3695 to schedule your free consultation now.