Bankruptcy - Is It The Right Choice For You?
Bankruptcy is one of the tougher choices
we as adults face in todays 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 theres 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. Lets 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 lets 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 its 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 lets
say you are able to pick up a part time job at $7.50
per hour for 20 hours per week. Lets 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 lets 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.
