All Financial Matters

Bankruptcy is not a process anyone wants to resort to. It can be seen as a way to get out from under a mountain of debt, but it also becomes a part of your credit report history. Put this option on the back burner and instead consider some options to avoid bankruptcy in the first place.

Create a budget. A budget is a tedious job, but it can save a lot of headache over debt later. Make a list of all the bills that are owed each month. Leave out incidentals like entertainment, eating out, and credit card payments. Subtract this amount from the monthly income. What is left is what will be used to pay credit card bills, put away in savings, and spend for leisure time activities.

Keep track of your bills for three or four months. This will give you an average amount for the bills that you can plug into your budget. If you can enroll in equal payment plans for utility bills, the payments will be the same every month. Creating a budget will help avoid debt, due to your discipline in following the guidelines that you have set. You can still enjoy a night out now and then as a reward for saving money.

Avoid using credit cards more than necessary. Credit cards carry high interest rates. We’ve all seen the commercials where things run smoother in the store when everyone pays with plastic. That may be, but using that plastic too much can leave you with a debt worthy of bankruptcy. Keep one credit card and get rid of the rest. Companies extend you credit with the hopes that you get overextended and then they can charge higher interest rates and all sorts of fees. Save yourself the headache and avoid using them.

When you get behind on a payment, call the credit card company. Everyone hits a road bump. A layoff or an illness can send things spiraling out of control with your finances. Let credit card companies know that you are in a bind at the moment. They may suggest ways to lower the payments or suspend them for a month or two until you are in better financial shape.

It takes several missed payments before a creditor reports the delinquent account to an outside agency. Instead of waiting for the hammer to fall, take the initiative to solve the problem before it gets worse. The company may suspend late fees and other charges when they become aware of your situation.

Go for debt consolidation advice. You hear a lot about debt consolidation. Agencies want your business. Check them out. These credit counselors are certified professionals that know the debt game and the creditors. For a small fee, they can negotiate with your creditors to find solutions to the financial problem. If you are considering bankruptcy, debt consolidation may work as an alternative.

Liquidate assets. You may have two cars, but can you make due with one for now? Selling property can free up the cash you need to pay off major debts. With a smaller debt, you may be able to talk to creditors and make payment arrangements. Move into a smaller house if the kids have moved out. Anything is a better alternative than bankruptcy.

Bankruptcy is not a process that people look forward to. Bankruptcy ruins your credit and may not entirely get you out from under. Learn to avoid this unfortunate choice before it’s too late.

So you had to file for bankruptcy. Unforeseen circumstances can cause this to be the only option. However, just because you were once bankrupt does not mean that your future is grim.

Bankruptcy is a hard choice to make. Millions of people have experienced it and come out on the other side. It won’t be easy, but you can recover from this type of financial disaster. Bankruptcy is not the end.

Your credit can be repaired after going through a bankruptcy. Start by paying your bills on time. If you filed for a Chapter 7 bankruptcy, your debt would have been wiped out along with some of your assets.

Be responsible with what you still have left. You still have your home. Make utility payments on time. Establishing a record of timely payments is one way to work towards fixing your credit.

After a few months, apply for a secured credit card. Secured cards require the cardholder to pay a deposit. This is the money that you will start with. Over time, you may qualify for an unsecured credit card.

Stick to one credit card and avoid making regular charges on it. Keeping the card for emergencies is a good idea. Having a credit card re-establishes your credit.

Train yourself to pay for everything in cash. Unless you have cash to back up a purchase, don’t buy anything; this could be one reason bankruptcy was filed in the first place. Going back to using cash is a healthy way to build up a bank account and savings account balance.

Create a plan for success. You have been bankrupt once so you don’t want to go there again. Divide discretionary money between savings and a fund for emergencies. Since your debt was wiped out, there should be no credit card payments to consider at this time.

Once you get that first credit card, companies will start hounding you. Don’t give in to them. Be flattered, but resist the urge to get started with the credit card debt cycle again.

Discipline yourself to live within your means. This includes saving for a rainy day. Consult a financial advisor or go to credit counseling. Credit counselors can give you information about money management and spending tips.

A financial advisor can take the extra money that you put in a savings account and show you how to invest for the future. One day you will want to retire. Retirement could last as long as twenty to thirty years. Having enough money to live out that portion of your life is important. Concentrate on that part of your financial future as you wait with patience for your credit to be re-established.

Bankruptcy is not the end of the story. People can recover from it and develop a healthy financial picture. However, it takes time and patience.

For those who feel that they are in serious financial distress, they may have considered bankruptcy as a possible solution however, bankruptcy is not something to be taken lightly.  Whilst your debt may be wiped clean, there are far-reaching consequences for that “new freedom”.

When a person’s debt has risen to a level that they can’t hope to get under control, they may consider filing for bankruptcy.  For a consumer there are two bankruptcy choices:  Chapter 7 and Chapter 13.  Chapter 7 bankruptcies involve wiping out the debts in part or in their entirety and liquidating assets to do it.  Chapter 13 bankruptcies are more of a debt restructuring plan that gives you more time and a plan to pay back a portion of the debt that is owed to creditors.

Bankruptcy damages a person’s credit rating.  A bankruptcy judgement stays on credit reports for as long as ten years.  During that time, any credit that is applied for will disclose the bankruptcy to the creditor.  If filing Chapter 13, you still have to pay back part of your debt and the judgement stays on your credit report for ten years.

In the past, people have taken advantage of the bankruptcy laws.  For instance, people have been able to file more than once for Chapter 7 bankruptcy.  They have used it as their own personal “debt eliminator”.

Each state decides on what assets they will exempt from being seized during a bankruptcy hearing.  Knowing that, some may use available cash to purchase those items (real estate property, vehicles, etc.) in an effort to avoid payment and still retain the stuff they purchased.  In this instance, creditors receive little or nothing from the bankruptcy settlement.

The new laws concerning bankruptcy have changed this.  Whereas courts used to have the leeway of deciding who could file for Chapter 7 bankruptcy, there are now criteria that must be met first.  In order to file for Chapter 7 bankruptcy, a person has to have an income that is below the median income for the state where they live.  Their income must be put through a calculation that determines if they have enough disposable income to pay 25% of their outstanding debt.

More people that file bankruptcy will have to file under Chapter 13.  The courts decide what a person could pay from the information provided to them.  There is an allowance made for rent/mortgage, food, and other pertinent bills.  With the new bankruptcy law, standards set by the IRS determine allowable values for each of these bills.  A certain amount is exempted, and the payments are determined from the rest.

Because there are more hoops to jump through, bankruptcy lawyers are charging more for their services.  The whole process of bankruptcy will cost the filer more than before, which will make them think twice about the process.  Credit counselling sessions are also required as a precursor to filing for bankruptcy.  A credit counsellor may determine that they can help you and thus eliminate the need for bankruptcy proceedings.

Bankruptcy should always be a last resort after careful consideration of alternatives as well as the consequences of filing for it.  While it will give you a clean slate, it does come with a heavy price.

Few people will actually want to file for bankruptcy even if you often hear about big corporations doing it all the time, but individuals are very difference from corporations.  As an individual, finding an alternative to bankruptcy can save you a lot of trouble in the long run as it isn’t a solution without side-effects.

First off, consider loan to consolidate your existing debts.  Debt consolidation means that all of your debt is grouped together and a loan secured for the overall amount.  Creditors get paid what is owed to them and the bank that issues the loan is given a monthly payment that the consumer can afford. Very much a win-win situation for all concerned.

Debt consolidation mostly includes unsecured debt.  This would be credit cards, store credit cards, unsecured lines of credit from companies, and gas cards.  Unsecured debt is what creditors have a hard time recouping from people because it is not backed up by any collateral.

If you can’t find a bank that will give you a debt consolidation loan then try going through an agency.  The agency counselors are used to working with creditors and can negotiate on your behalf.  They can even get your debt dropped by as much as sixty percent.  You then make just one monthly payment to the agency, and they take care of the rest with the creditors.

Debt consolidation does not involve liquidating your assets.  With bankruptcy proceedings, the court may rule that you have to sell your belongings at much less than their market value in order to pay your creditors.  On the other hand, debt consolidation allows you to keep the things that you have and offers up another solution.

Another option is to get a second job.  It isn’t necessarily a pleasant option, but if getting another job will allow you to make a sizeable credit card payment each month for a year or two until your debt is repaid, then it will prove to be well worth it.  If a second job is not feasible, ask about overtime at your current job.  You need to find a way to make more money if you want to reduce your debt.

A second job can be a way to supplement your income while you are paying off a debt consolidation loan.  Things come up without warning and you may need more cash than you have available.  A second job will help you to save for a rainy day and still make payments on your debt.

You could also consider starting a home business.  For those who are in a time crunch that prevents a second job, a home business may be the most suitable option.  Most can be started with little or no money.  For example, selling unwanted items from around your home on eBay can bring in some extra money when you need it most.

Do you have a special skill?  Market that to others who could use your services.  Remember to earmark the money to be used for resolution of debt and not to spend freely and incur more debt.

Bankruptcy is not the way to go if you don’t absolutely have to.  Always try to seek alternatives to this final course of action.  Any changes you make don’t have to be permanent, just until you get out of debt and back on a more stable financial footing is what you’re aiming for.