Bankruptcy - Is It The Right Choice For You?


Bankruptcy is one of the tougher choices we as adults face in today's society where it is the norm to be in debt, albeit some more so than others. Credit card offers materialize whether you are looking for credit or not. All with their own perks and benefits may sound tempting enough to open and start charging. After all that free toaster oven, or the free airline perks might go a long ways! Or on the second look they might not be so free after you account for the interest rates or the additional card usage charges that some credit card companies place into your annual or monthly charges. We all like the word free, after all there's not a whole lot better than getting something and not having to pay for it. However that portion of the topic is for an article somewhere down the line at another time as this article is to serve as focus on the tough choice of filing for bankruptcy protection.

If necessary bankruptcy provides a very valuable and viable option for those who must find a way to get out of their current financial situations. With the medical costs increasing annually and the cost of living seeming to increase daily, just look at the increasing cost of groceries or fuel at the pumps for an example, it is more understandable as to why over so many Americans filed for bankruptcy protection last year.

On the same note it is important that an individual takes all necessary precautions when making the decision to file or not. Here are a few things to review before you seek help.

Household Budget -

Have you worked on creating a household budget that you can stick to? For example purposes lets say that you have a cell phone bill that averages $75 dollars per month. Let's also say that you have a cable TV bill that runs about $60 dollars per month. By removing those two items you could potentially free yourself an additional $135 dollars to pay towards your outstanding debt. This may not seem like much but let's say we factor in other cost such as your entertainment expenditures, magazine subscriptions, cigarettes, eating out, things that are more for pleasure but not needed to make it. You could potentially save several hundreds of dollars to apply to other debts that require payment. Adjusting your budget may even allow you to pay more than needed therefore getting yourself out of debt sooner than initially thought.

Employment -

Few of us want to work more. Work is one of those things that we know needs to be done however it's not always the brightest way to spend our days. However I recommend that you look at your schedule to determine if you are capable of finding a short time job to help pay back your debts, or at least give you the head start needed to help you gain control of your finances and possibly avoid bankruptcy. Would working an additional 20 hours a week for 3 months give you the financial lift needed to reduce your debts to the point where when coupled with a restructured household budget give you the lift needed to resolve your debts on your own? For example let's say you are able to pick up a part time job at $7.50 per hour for 20 hours per week. Let's say your taxes are 25% of your gross pay. You would end up netting $450 per month. This might not seem like much, however if you do this for three months you could apply $1350 dollars towards your total debt. If you add that along with the money you potentially saved after reviewing your household budget this could lead to an additional $1950 dollars that you may be able to apply towards your outstanding debt based on an average of a $200 monthly savings from your newly created budget plan.

Secured Debt -

In some situation bankruptcy may be able to be avoided if an individual looks at their secured debt and can find if they may be able to reduce their monthly payments through consolidation or refinancing. For example let's say you have a car payment that runs you around $350 dollars per month and you have a house payment that runs you $1000 per month. These two purchases together will drain $1350 per month from your account. If you speak to a bank or a credit union ask them if they have refinancing options available that will leave you with a lower monthly payment and a lower interest rate. This option should be used as a last resort as you are creating a loan to replace another loan in which you will most likely pay a lengthier term on.

Credit Counseling -

Try speaking to a debt reduction service regarding your financial situation. It is important to make sure that the company you are speaking with is a credit counseling company in good standing with the Better Business Bureau and offers you free advice without pushing you into a debt repayment plan. The company you speak to should review with you all of your options before making the determination that there service is needed.

By looking into these options you may save yourself from declaring bankruptcy and harming your creditworthiness for up to ten years. Although bankruptcy is an option, it should be the last option as it does more damage than good in many cases.

Article written by Richard Munster

Rick Munster is the Media Planner for Debt Reduction Services http://www.DebtReductionServices.com When he is not busy media planning he enjoys writing, hiking or fishing near his home of Boise, Id.

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Debt Relief Information:

Related Articles

Debt and Your Dreams
You may not realize what that credit card bill is doing to you?Bob is a 27 year old truck driver. He dropped out of college after one year and got a job.
The Bankruptcy Code Acknowledges the Validity of the Homestead Exemption
Many times the subject of bankruptcy seems baffling in its complexity. Actually the basic principals of bankruptcy are fairly simple even though the federal statuses on bankruptcy are extensive.
Secrets to Why Debt Reduction is So Vital for Your Financial Health
Living with debt is never a good idea if you want to make long-term financial plans. Every cent you use to service debt is money that could have been invested in your future.
How to Reduce Your Debt in 5 Easy Steps
If you have incurred substantial personal debt, consider these options: budgeting, debt consolidation, credit counselling from a reputable organization and working with your creditors. You will need to choose a debt reduction method that will work best for you? The method you use will depend on your level of debt, how much spare money you have, your level of discipline, and how quickly you want to get out of debt.
New Bankruptcy Legislation May Make it Harder to Find an Attorney
The recently passed Bankruptcy Abuse prevention and Consumer Protection Act will make it harder for people with problem debt to have their debt eliminated through filing for bankruptcy. This new legislation will make it harder to have debts wiped out by the courts, and will require more debtors to pay back some or all of their debts.
Credit Counseling - Signs That You May Need Help
Credit counseling is a viable option for those who are feeling the stress of being overwhelmed by debt. Credit counseling primarily offers assistance with working out a credit and debt repayment plan for an individual to gain control of their finances by creating a structured budget for an individual to follow.
Credit Card Debt & the Unfairness of the Universal Default Clause
Let's look at a real world example: A woman purchased a new $4,000 large screen TV a few months ago based on the knowledge her monthly payment was going to be $175, and based on the 9% interest rate charged by her credit card company. For five months straight she made all her payments on time, but in the fifth month she was late paying her mortgage bill, for reasons unknown.
Dont Let The Good Times Bury You
It is vital to get rid of debt while things aregoing well. Yet the opposite is usually thecase.
Out of Credit Card Debt - Without Filing Bankruptcy
To be out of credit card debt is your dream and you're tired of the redundant advice to live within your means. Look no further.
Hide That Car! Fighting the Repo Man
Vehicle repossession may appear justified in circumstances where a person is generally being irresponsible and otherwise able to meet this financial obligation. However, what about that hardworking guy or gal who paid their automobile note dutifully for three years, and missed one payment? Why should their car be repossessed?Basically, the lender owns your car until it is paid in full.
Personal Debt Reduction Practices
Personal debt reduction practices, the steps people take to relieve the debt in their lives and to become more financially free, are a hot topic among financial circles. American spending habits are producing more people who are deeper in debt rather than people trying to achieve financial freedom.
Debt Settlement -- Why the Critics Are Wrong
After October 17, 2005, a lot of people are going to become interested in debt settlement as an alternative to bankruptcy. That's the date the new bankruptcy law goes into effect, and it means a rude awakening for many consumers seeking a fresh start in bankruptcy court.
Debt Elimination 3
Planning To Achieve Debt EliminationOnce you have started the process of changing your debt mindset to be against taking on consumer debt, then that is something you need to continue until it becomes the norm in your life. In some ways it is like stopping smoking; trying on will power alone is not enough, you need to get to the source of your problem and permanently change it.
Bankruptcy, Is It A Way Out
Negotiations with creditors have failed. Repossession is imminent and foreclosure proceedings have begun.
Credit Card Debt Freedom is Possible
Credit card debt have you drowning financially? You're not alone. The average American household carries $9,205 in credit card debt, according to CardWeb, an online industry tracker.
The 5 Secrets to Getting Out of Debt Fast
As they stare down at a teetering pile of bills, so many consumers wonder how they racked up such a large debt. The answer boils down to simple mathematics.
Drowning in Debt? Tips and Tricks for Getting Out of Hot Water with Creditors
Do you, like millions of other Americans, feel like you're sinking in an ocean of credit card debt? Well, fear not--there are many options for reducing your debt way before you have to be concerned about receiving notices or daunting telephone calls from debt collectors. The important thing to remember is to be proactive in handling your credit card debt.
Creating A Realistic Budget
Budgeting -- ooh, what a scary word! If you want to frighten someone whose finances are out of control, suggest that they tally up their expenses on a piece of paper. We all understand the value of such an exercise, but when it comes to the practicality of putting a budget together, we get cold feet.
Craving For Financial Freedom
Have you ever felt trapped in a Rat Race and wished to retire quickly but rich?Have you ever felt that you are spending way too much time working with your boss at your office instead of with those you love? Your spouse, children, friends?Have you ever felt frustrated because you are so deep in debt that you think you won't be able to retire because as soon as you do, the money will stop coming and thus you won't be able to pay off your mortgages and credit card?Have you ever felt that you have no control over your life anymore in terms of time? Think about it: can you take a vacation just anytime whenever you want/ need it and as long as you want/ need it?Have you ever wished that you can work whenever you want and wherever you want?You are not the only one!Too many people are trapped in a Rat Race because they have to. There are too many bills to pay, and too many dreams to fulfill.
Should You Invest In Savings Or Payoff Your Debts?
I have faced this financial question 8 years ago and recently I have friends asked me this same question. I think I should write it up so that it may help some of you that having the same situation.