Avoid bankruptcy in 5 steps. That is what the Finance Talking Hub says is a recent blog post. The person posing this question wants to start a business, but they do not want to file bankruptcy. I can handle that. In reality who wants to file if they don’t have to? None of my clients do.
Finance Talking Hub offers 5 steps to avoid bankruptcy. Get ready. Hold on to your seat. I don’t want you laughing so hard you fall off and hurt yourself:
- Do a debt consolidation
- Pay your bills on time for 2 years
- Get rid of everything you absolutely don’t need to have and live simply for a while.
- Get a second job and dedicate the income to paying off your debt.
- Settle with some of your creditors.
Do a Debt Consolidation
Debt consolidation is where you take out a loan to pay off your bills. Huge mistake. Is this guy a congressman? The best way out of debt? More debt of course. The sad fact is that everyone I know who has taken a debt consolidation loan to pay off credit cards will eventually run the credit cards back up. Then you have a consolidation loan plus all the credit card bills all over again. On the flip side if you are like most of my clients no one will give you credit for anything, except maybe a pay day loan.
Pay your bills on time for two years
Now here’s one I bet you never thought of! Great goal, but very unlikely you will ever be able to do it. If your minimum payments are higher than your monthly income simple math says: impossible.
Get Rid of All Your Stuff and Live Simply
I love this one. Unload all your stuff in a garage sale then move into a cave, or under a rock. Nothing beats the simple zen life. Is there mail delivery to the nearest cave or rock so you can get the credit card and debt consolidation bills? If you file bankruptcy, Ohio law allows each you and your spouse to keep just over $10,000 in household goods, furnishings, and clothing. You don’t need to sell anything and live like a monk to file bankruptcy.
Get a second job
Why didn’t you think of this one? Could it be because you just lost your first job, and you need to find that job again before you can get a second job? There it is again: simple math. One comes before two. The writer must be from one of those parts of the country where jobs and money are hanging from trees just waiting for you to pick one, or maybe two if you need a second job.
Settle With Your Creditors
Settling your debt works real well. Right up to the point where the greedy creditor reports the settlement to the IRS and you are taxed for the amount you “saved,” so they can deduct the amount they won’t be able to squeeze out of you. Never mind the fact you are still looking for your number one job to replace your income.
These recommendations to avoid bankruptcy in 5 steps sound good, and are very academic as well. Unfortunately they are not grounded in the real world. That is where I am, and from where my clients want me to help them escape. This is the kind of crap your congressman was fed and he swallowed it all when he limited your rights in bankruptcy. Debt is something you got into because you are weak and irresponsible. Never mind the credit card interest over 30%, the recession, the collapse of you home value, and unemployment.
There is absolutely nothing wrong with filing bankruptcy, keeping your possessions, and not taking on more debt to pay the old debt. If you live in the West Shore suburbs of Westlake, Bay Village, Rocky River, North Olmsted, Fairview Park, or Lakewood you don’t need to do foolish things to avoid bankruptcy. You can call me for help in complete confidence.
photo credit: JanetR3