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!

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?

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:

Management Of Your Finances

You can hire a financial manager for handling your debts, and to pay you an "allowance" in the mean time till you get things turned around. This option is known to be helpful if your problems are related to bad spending habits. North Americans are taught that it's okay to buy items we want with other peoples money so this fuels the urge to spend more than we make. If you don't want something so rigid, simply having a financial counselor help you create a budget can go along way. Don't forget though a budget will only work for disciplined folks that don't have problems 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.

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.

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.