DEBT FREE IN 2011: Bankruptcy and Alternatives

Living paycheck to paycheck to paycheck can strain your relationships and add stress to your already pressure filled life. Keeping up with minimum payments, the monthly bills, and the endless monthly “surprises” that come in the form of an auto repair, medical expense, or whatever else, can make it impossible to get ahead and build real wealth.

For many in Miami, we forgot what it meant to live within our personal budgets and went for the quick fix of buying now and paying for it later. Credit card companies, car dealers, and rent-to-own rackets have been collecting excessive amounts of interest and late fees on us for long enough!

The solution for many folks is to press the “reset button” and get a fresh start by exercising their constitutional right to a bankruptcy. After a bankruptcy, instead of paying all those cards with 20% interest, they can save the money or invest it and start building a portfolio of real wealth.

Certain things that are worth considering when determining if a bankruptcy is right for you is the amount of debt you have and how much it is worth to you to not file a bankruptcy? A lot of folks that consider the bankruptcy option are making less than $40,000/ year and have twice as much debt, their mortgage is a lot more than their house is worth, and they are barely scraping by every month. How will they ever climb out?

Is paying back that $25,000 of high interest debt really worth not filing for bankruptcy? How much would you be willing to pay to not file? If you have $40,000 in dischargable debt is it worth $40,000 to pay back instead of filing? The answer is really up to every individual. There is no wrong answer. However, the fastest way to eliminate the debt and excessive interest and fees is to file the bankruptcy. A lot of famous people have done it, including Donald Trump and Walt Disney.

David Ramsey is a famous author and radio-host who wrote “The Total Money Makeover”. He offers a lot of good advice to consider when you are trying to figure out how to get out of debt. His books are worth reading. In short, he suggests that you stop incurring further debt. Cut up the credit cards. If you can’t afford your car, sell it and trade down for something you can afford without payments. Stop wasting money eating out and taking vacations. Once you stop the money-bleeding, he suggests that you make a budget, save up a quick $1,000 emergency fund, then organize your bills from smallest balances to the largest, and then only pay the minimum balances on every bill except the one with the lowest balance. On the smallest balance, pay as much as you possibly can, as soon as you can (like every pay period). He calls it “building the debt snowball” and every day people call into his show to tell them how it worked for them. His books are full of information and my description is just a quick summary of his suggestions.

The debt snowball idea is a great way to keep yourself focused while you pay down bill after bill and chip away at what initially seems impossible. But sometimes, the debt snowball isn’t enough. Sometimes, the ability to work more hours, stay in school, raise the kids or whatever, makes making the minimum payments next to impossible to meet. That’s when bankruptcy becomes for many the last best hope, and the only way to get back on the path to a more prosperous life. More importantly, the experience allows one to start fresh and really create substantial wealth for themselves.

When someone owes their creditors balances that they cannot pay, whether its a credit card company, mortgage company, bank, etc., that creditor has the ability to sue them and get a judgement that can allow them to garnish their wages, empty their bank accounts, suspend their driver’s license, force them to sell their cars or other property, and make life truly miserable. Attempts to negotiate and settle the debt for a fair amount often just leads to more misery and failure.

When the banks, lawyers, and other creditors refuse to help you pay them what you owe, your best weapon can be a bankruptcy. There are different types of bankruptcies depending on your individual situation. Some can take as little as 90 days from start to finish. When you assess your situation, you may find that the relief you have been looking for is just about 90 days away. Starting fresh and getting back on the path to building wealth for yourself can be easier AND FASTER than you ever thought. Your fresh start may be just a call away. Call today for a free consultation, 305-665-3978.