As you might predict given the state of the economy, bankruptcies are on the rise. I do not consider bankruptcy an option under any circumstances. I have helped people plan out ways to reduce their debt costs per month and put an end date on paying everything off.
Third quarter 2008 bankruptcy numbers were recently released, and individual insolvencies have increased by 8.8% over the prior quarter.
Here are several strategies to avoid bankruptcy:
1. Do not buy stuff that you do not need. Bankruptcy means you cannot keep up on debt payments. If you cannot keep up, you spent too much on stuff you did not need or could not afford. Look at ways to cut your spending.
2. Work strategically. Make a list of all of your debt and try to consolidate your higher interest debt to the lowest limit you can. If you own a home, equity loans may be able to lower your interest rate significantly.
3. Stop making it worse. Do not increase your debt while you are trying to pay for debt. Skip the vacations, skip the new TV, cancel your cable, do not go to Starbucks, cook rather than eat out, bring your lunch to work, etc. You can do it.
If you can get yourself into a bad situation, you can get yourself out of it. It will not always be pleasant or easy, but you can do it. It is much better to deal with your problems head on than declare bankruptcy. That bad mark will spend at least seven years on your credit report.
