Avoiding Bankruptcy
Bankruptcy is not a pretty word. Thats usually why we do not like to think about it. Unfortunately not thinking about a problem often can only lead to it becoming worse.
In 2005 the US government revised the rules concernig bankruptcy. While there are too many changes to list here, what you need to know is that it is not as an easy way out as it has been in the past.
Before proceeding with bankruptcy you absolutely need to consult an attorney. An attorney can help you protect yourself while following the law at the same time. People ask, what if I hide some money on the side and then file for bankruptcy? This is called bankruptcy fraud. If caught, you will find yourself in a lot more trouble than late interest payments could bring you.
So what about avoiding bankruptcy? Is it a reasonable expectation? To avoid bankruptcy you have one goal: take control of your financial situation. Often this simply means working more while spending less.
As simple as that sounds it is not pretty or fun. It is not unusual for someone to work both a full time and part time job to increase their income. At the same time, they cut all unessasary expenses (not like you would have time for them anyways.) Depending on the size of your debt, be prepared to do this for a few years.
The fact is bankruptcy exists for a reason. It allows people to get a fresh start on their financial lives. For a small business owner, it allows them to pass some of their risk off on to a lending institution. Throwing productive members of society in a debtors prison does not help anyone.
If your debt is bearable, yet it looks like paying your bills on time will be impossible, then declaring bankruptcy may not be your best alternative. So what can you do?
First you need to elimanate all excess spending. Here are a few common things you need to put an end to: eating out, coffee (a daily Starbucks habit can run you over $1,000 a year), movies, sporting events, concerts, and bar tabs.
Take a hard look at your monthly bills. I'm guessing that they include a mortgage or rent, car payments, utility bills, phone bill, cable, and mobile phone. Unfortunately you signed a contract for that phone. However, you might be able to pull a few tricks to get out of it. Get rid of your cable television, especially any premium packages. If you have a broadband internet connection you can sign up with a company such as Vonage and pay under $20 a month for your phone service.
It sounds like a step by step plan to erase the fun out of life, doesn't it? Whether you choose to avoid bankruptcy or to file you have a rough road ahead. There is no get out of jail free card or easy button.
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