Getting out of debt
By: Karl Seale | Posted: 16th November 2006
Getting out of debt
Here's help for those that require it and who have the need to stave off bankruptcy, if you do not already know anything about bankruptcy.
This article is about how to deal with the problem of bankruptcy but before that, there is something which everybody knows but doesn't really take note much of it and is the term called "budget", or budgee if you would. Well it is not about or anything to do with birds, or something of that sorts. Sometimes, I am quite amused by this term really, and it makes me laugh. Or do you get budged sometimes when you over budget. Hmm.. we should all try to budget isn't?
Are you making minimum payments to your credit card? Do you consolidate your debts and find your self paying more in the long run. Are you deeper in debt today?
You are probably not alone, because debt is destroying millions of families across the world and could possibly be the number one reason for high divorce rates and families breakdown.
So really what is bankruptcy? It is a step which allows a debtor (someone who owes money to someone else) to get a court ordered exemption from his debtors. In many cases bankruptcy infact act as an effective method to get rid of debts and creditors. But everybody who are facing any financial difficulty should not file for bankruptcy and there are obvious reasons why.
It is a difficult question really whether you should file for bankruptcy. You'll have to discuss this with your family, your wife or with a credit counselor or solicitor as they would be in a better position to determine the benefits and costs of doing so in your particular situation.
The type of debts and the size of it matters and is crucial when you are making the decision to file for bankruptcy or not. You should weigh carefully the consequences before you finally make that decision. Many bankruptcy filings could have been prevented with a well maintained budget.
What then are the alternatives to bankruptcy?
There are numerous choices available instead of filing for bankruptcy. Which one is more suitable and appropriate for you depends largely upon your financial situation. There again, you would probably do well if you go for financial counseling first prior to filing a bankruptcy case to make sure you know the full picture of what you are actually doing.
Here are some possible ways available to you to take:
Management Of Your Personal Finances
You can hire a manager for handling your debts payments, and to pay you an allowance in the mean time till you get things moving. This option is really helpful if your problems are related to wayward or just plain lousy bad spending habits. Americans are taught that it's okay to buy items on credit as we are using other peoples' money, so this fuels the urge to spend more than we can afford. If you don't want something so rigid, simply have the counselor help you to create a budget to go with. Don't forget though that a budget will only work for disciplined folks that don't have problems buying unwanted stuff.
Refinancing
Do you own your house that you have been paying for a while. Consider refinancing it and if you have some equity in there, there is a mighty chance that you can refinance it and get it at a real bargain interest rate and pay off your debts faster. There again budget is the best. Loan packages from banks or credit unions may be another alternative.
Sorting out your debts
Counselors can be really expensive so choose one wisely if you are going to buy this one. Perhaps you can hunt for a not-for-profit counselor in your area. Creditors do know it can be hard to collect money from you whether you declare bankruptcy or not. Also, the collection agencies take large commissions cuts for collecting and litigation can be very expensive too, and it is time consuming and forcing debtors to file for the bankruptcy does not guarantee the recovery of debt is certain.
Credit Repair Offers Are Sometimes Scams
You may have come across ads offering to repair bad credit or promising to remove bankruptcy status from your credit history. Please proceed with extra caution as many of these offers are fraudulent. Your credit rating may or may not be boosted after all.
So to conclude: don't tempt yourself with stuff over the shelves and do whatever you have to do so you don't spend more than what you earn each and every single month. A well taken care of budget will go a long way to improve your financial health. I guess this should be of some help or guidance to you. Anyhow, don't worry, life would be better tomorrow.
The author of this article is Karl Seale, a writer of many articles on debt consolidation. You can find his articles in http://consolidate-creditcarddebt.blogspot.com
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Tags: budget, credit card, money, consequences, choices, sorts, debts, getting out of debt, creditors, birds, solicitor, minimum payments, debtors, financial difficulty, credit counselor, divorce rates, bankruptcy filings