Yes this article is about bankruptcy but please note that as you read you may come across the word 'budgie'. It has nothing to do with birds; in fact I kind of like the little feathered creatures. I interchangeably use the word 'budgie' or 'budgies' rather than budgets because a budget almost always get budged and also as it makes me laugh!

Well than, simply put bankruptcy is a procedure which allows a debtor to get a court ordered exemption from his debts. In some cases this is a viable option. Although just because someone is in debt doesn't mean it's time to file for bankruptcy as there are consequences.

Is bankruptcy an option in my case?

There is no quick and easy reply to this question. This is something you should discuss with a bankruptcy attorney or a credit counselor as they can fully evaluate the benefits and costs of bankruptcy. The kind of debt you have can be a relevant factor and really the final decision is always up to you. Just make sure you know the consequences and benefits fully before you make a final decision. Allot of bankruptcy cases could have easily been prevented with some diligence and a tight budget.

Other than the big 'B' what's available?

The options are numerous. Your financial situation is primarily going to determine your options available. So, get some financial counseling before filing bankruptcy and make sure you know the full consequences of your options.

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 (:--).

"Working Out" Your Debts

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.

How about your house?

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.

Avoiding Credit Repair Scams

You may have seen ads offering to repair bad credit or promising to remove bankruptcy from your credit history. Many of these offers are fraudulent and proceed with caution. Your credit rating can be boosted but I'll save that for another time.

Oh, on another note, stay away from "bright shiny objects" (got that term from my neighbor). Simply put, don't put yourself in situations of drooling over items that are not in your budget. If it's something always on TV, turn it off man! The budgie is very important and could get you out of this mess without giving into what seems the only route, that being bankruptcy. Depending on your situation of course. If your several million in the hole and your only experience is working fast food joints (has made millionaires out of many btw) well, your either going to need lot's of prayer (call me if you go this route) or file for bankruptcy. I hope this has been of some help or at least a tad humorous to brighten your day.