As a Memphis bankruptcy attorney, I see clients all the time who were trying to get out of debt but ended up in trouble.

If your New Year’s resolution in 2013 is getting out of debt, make sure you do it the smart way. Here are some tips for making sure you don’t end up worse than you started out:

1. Cut Up Those Credit Cards.

Don’t give yourself a way out. If you want to live on a real, money-backed budget, you need to be using real money. Start depending on debit or secured credit cards that limit the amount you can spend. If you absolutely must use credit, don’t spread it out among accounts – that just creates more creditors and more harassment down the road.

2. Get an Accountability Partner

If you don’t surround yourself with other people who share your priorities, you’re a lot less likely to achieve your goals. Find friends and a support group that will help you stay motivated about your debt. A number of area churches in Memphis have programs that could help, including Lindenwood and First Evangelical.

3. Beware Loan Modification

If you’re having trouble paying your house note and you can modify your loan, a loan modification is a great opportunity. However, in today’s financial climate banks aren’t approving very many modifications. It’s highly likely you’ll be turned down – and if you are, you don’t want it to be too late.

We have clients call our office sometimes in a panic because their modification fell through and they’re facing immediate foreclosure. If that’s your situation we can certainly help, but try to avoid it by applying early for a modification and never assuming you’ll get one. If foreclosure is approaching, don’t just put your hopes in the bank – contact us before it’s too late.

4. Don’t Ignore a Creditor’s Lawsuit.

If a creditor contacts you claiming they plan to sue over your debts, you should give us a call. Often lawsuits like this will lead to wage garnishment. If you ignore the suit, your wages will be garnished and creditors will still be allowed to harass you.

Sometimes you don’t even know you’re being sued. Keep in mind we can help during any part of this process. We can stop wage garnishment and creditor harassment even after a court allows the garnishment to begin.

And if you’re considering just letting the wage garnishment happen until your debt is paid, you should remember there may be ways to create a payment plan so you don’t lose so much of your paycheck every week. We can help with that.

5. Don’t Believe Bankruptcy Myths

Sometimes it simply isn’t possible to get out of debt the way the gurus tell you to. If you don’t have an income, or your house is up for foreclosure tomorrow, or your car is about to be repossessed, you may not have time to develop your perfect budget before it’s too late.

In these cases, bankruptcy can help.

If you have fears about bankruptcy – like what it will do to your credit or whether it’s morally wrong – we recommend two things:

1) Give us a call! Our bankruptcy attorneys in Memphis would be glad to discuss your concerns and help you decide if bankruptcy is right for you. The consultation is free (100%, absolutely, no-strings-attached free) so it doesn’t cost you anything to talk about your situation. 901-327-2100.

2) Check out the resources on this site. We have hundreds of FAQs about bankruptcy that may answer your questions, and we offer a free report on what to expect after filing bankruptcy. If you have questions after that, you can always let us know.

From all of us at Darrell Castle and Associates, we wish you a very Happy New Year. We hope 2013 brings great success, peace, and joy for you and your family!

(Photo credit: Dez Pain)