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.
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