Certainly this article is about bankruptcy but I want to tell you up front that you may come across the word 'budgie'. Don't worry, the article is not about birds; I do like budgies though. I use the word 'budgie' or 'budgies' sometimes in place of budgets because a budget is known to get budged and also as it makes me laugh!

Okay, so bankruptcy is a procedure which allows a debtor (someone that owes money to someone else) to get a court ordered exemption from his debts. In some cases bankruptcy can act as a valuable method to get rid of debts. But everybody who faces any financial difficulty should not file for bankruptcy.

Is bankruptcy an option in my case?

Tough question really. You'll need to discuss this one with a bankruptcy attorney or a credit counselor as they can determine the benefits and costs for your situation. The kind and amount of debt you have can make a big difference and really you make the final decision in the matter anyway. Know the consequences fully before you make your final decision. Many bankruptcy filings could have been prevented with a strict budgie.

What are the substitutes to bankruptcy?

There are numerous choices available rather than filing bankruptcy. What is suitable to you depends largely upon your financial situation. Again, go for financial counseling prior to filing a bankruptcy case to make sure you know the full ramification of what your about to do.

Here are some possible alternatives to bankruptcy:

Financial Management

It means allotting a nice deal of control, you can employ a financial manager for paying your bills, and to place you under an "allowance" until your financial conditions are back in proper order. This can be especially helpful if your financial problems are a result of bad spending habits. In North America we are told we can have anything we want without paying for it (credit) and that if it's bright and shiny, you probly deserve it so don't restrain, go ahead and rack up that credit card. Ooopsss..... bit of a rant there but I think you get the idea. For a less encroaching form of management by simply having a financial counselor help you create a budget. Just remember that budgets only work if your super disciplined and don't have problems with buying bright shiny objects (:--).

Give Your Debts A Workout

Financial counselors can be really expensive so choose one wisely if youre going this route. Look for a non-profit counselor in your area. Creditors know it can be hard to collect money whether you declare bankruptcy or not. Know that collection agencies take large commissions for collecting and litigation can also be expensive, time consuming and forcing debtors to file for the big 'B' doesn't guarantee recovery of debt anyway.

Refinancing

If you have a home, try to refinance your home to pay debts. By refinancing you can get long term financing at a very low interest rate, which allows you to pay your debts faster. Avoid dealing with companies that are offering you to combine all debts into single low payment loan, usually they have high interest rates and only want you to pay the interest and not the principle. Consider obtaining a loan package only through a known bank or credit unions.

Credit Repair Offers Are Often Scams

Before or after bankruptcy, some companies attract debtors and offer them packages such as repair bad credit or even promise them to remove a bankruptcy from your credit history. Allot of these offers are fraudulent. There are way's to boost your credit rating but I'll save that for another article.

So to conclude: don't tempt yourself with bright shiny objects and do whatever you have to so you don't spend more each month than what you earn. A well cared for budgie will go along way. I trust this to be of some assistance or at least gave you a laugh anyway. Anyhow, don't sweat it; there are more important things in life than money or the lack of it. Have a great day!