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9009 West Loop South, Seventh Floor, Houston Texas
1-866-889-9347 |
CCCS of the East Bay
A Division of Money Management International |
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Regional Headquarters - 7677 Oakport St., Suite 210, Oakland California |
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Avoid the Consequences of Bankruptcy |
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 Last year, a record 1.5 million people filed for bankruptcy protection. While bankruptcy is necessary for some people, many others file simply because they do not know their options. If you are considering bankruptcy as a solution to your financial difficulties, it is important to first understand the realities.
- Bankruptcy does not discharge all debts. Debts not dischargeable in bankruptcy will generally include back taxes less than three years old, student loans, alimony, child support and debts incurred through fraud.
- Bankruptcy can be expensive. In addition to filing costs and attorney fees, a notation that you filed for bankruptcy will remain on your credit report for seven to ten years. This notation could make it difficult to obtain any type of new loan; and, if you are able to obtain new credit, it may be hard to find a loan with affordable repayment terms.
- Bankruptcy affects more than your credit. Besides the obvious emotional issues involved with filing bankruptcy, it can also affect your ability to rent an apartment or obtain affordable insurance. In some fields, a bankruptcy could adversely affect your ability to gain employment or promotions.
- Bankruptcy does not change your financial habits. Filing for bankruptcy may not solve your financial problems. Lifestyle changes are proven to be more beneficial long-term.
The most common catalysts to bankruptcy are unexpected medical expenses, layoffs, divorce and overspending. Based on this knowledge, there are a few simple things you can do to possibly avoid filing.
- Obtain adequate insurance. In addition to required insurances, such as auto coverage and homeowners insurance, health insurance is a must. In fact, research has shown that more than 20 percent of bankruptcy filers state medical expenses as their problem.
- Establish a savings cushion. Establish a savings cushion. Three to six months living expenses in an accessible savings account may make the difference between a minor setback and a serious financial problem. If this seems unattainable in your present situation, think small. Just establishing the savings "habit" can begin to give you the cushion you need. Try having a small amount of each paycheck automatically deposited into a separate savings account. If you don't see it in your paycheck you may not spend it. Even $50 twice a month can add up to $1200 in a year's time.
- Watch your debt ratio. According to the Federal Reserve, consumer debt climbed to an all-time high of $1.7 trillion last year. Aim for your monthly debt obligations to equal no more than 20 percent of your take-home pay.
Most importantly, if you feel that you may be headed toward bankruptcy, seek help. For more information about the alternatives to bankruptcy, visit www.moneymanagement.org.
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CCCS, A Division of Money Management International
Regional Headquarters - 7677 Oakport St., Suite 210, Oakland California
Corporate Address - 9009 West Loop South, Seventh Floor, Houston, TX 77096
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