A person who is unable to pay his debts as they fall due for a number of reasons may be declared bankrupt by himself or by his creditors. You are in financial trouble if:

1. You are living beyond your means or spending more than what you are earning.

2. If you are relying on credit for your daily needs.

3. If you are having trouble stretching your paycheck to cover monthly bills.

Financial troubles should not make you lose hope. There are many solutions to regain financial health. All you have to do is act to cure the defect. First off is to consider available options.

1. Careful budgeting won't come amiss.

2. Create a plan of possible expenses according to priority.

3. Reduce unnecessary spending such as vacations, expensive entertainment and impulse buying. Instead of dinners in expensive restaurant try a barbecue. Aside from reducing the expenses, this is an opportunity for the family to bond. Clipping coupons, purchasing off the rack clothes, taking advantage of sales are several techniques to scrimp and save.

4. Living like broke college students (at least until the crises is over)would greatly help reduce expenses.

5. Try not to use the credit card as a ticket to unlimited spending spree. Remember that these purchases will have to be paid later.

6. Time deposit saving with low interest rates can be withdrawn and used to pay high Interest loans.

7. Selling assets such as cars and vacation houses will not only realize cash but will reduce maintaining expenses.

The government gives assistance in the form of unemployment compensation, food stamps and medical aid. The community groups and the church are also sources of additional assistance.

Enlisting the help of credit counseling agencies would greatly address this dilemma. These agencies can be found all over the country. They offer free services or sometimes at a very low cost to individuals with financial problems. Credit counselors have the prime task of giving counseling to individuals seeking help.

They will act as a "go between" the creditor and the debtor by negotiating payment schedules; restructure your financial situation by formulating cost effective budgets and give you options to address your financial troubles. A word of caution though, some credit counseling agencies would worsen your financial situation. Be wary if you are asked to give large amount of money.

If all else fail, the last option to take is filing for bankruptcy. Bankruptcy is a way by which an individual in serious financial trouble can have a fresh start'a new slate. But of course along with the peace of mind comes several draw backs. Bankruptcy would result to a ruined financial history.

Bankruptcy record would stay for at least 10 years. Business dealings in the future will be jeopardized since potential partners would think twice before dealing with an individual considered being a bad credit risk. Since bankruptcy orders are published, the society will be aware of your misfortunes. A financially crippled individual should consider if bankruptcy is a wise option, if the peace of mind that would result far outweighs the shame of being branded a financial risk.