Declare yourself bankrupt
There are many options that you should consider before you declare yourself bankrupt. The first question you should ask yourself is whether you can expect to pay off all of your debts within a few years while maintaining a reasonable standard of living. What do we mean by reasonable? Well, you’ll have to make some sacrifices and cut down on the expenses in your budget. Still, you have to be able to put food on the table and pay your basic necessities (like the mortgage and utilities) each month.
You may find that you really are able to pay off your debts within a few years if you make some adjustments in your financial habits. Cutting out the luxuries, like eating out frequently, can save substantial amounts of money which can in turn be used to pay down your debts.
There also other options, of course, including finding a second (or third) job which could bring in some extra income each month and help get you closer to being debt free. Transferring your credit card balances to a card with a lower interest rate can save you significant amounts of money.
Every bit helps, but just don’t deceive yourself into thinking that you can use your credit cards again without any restraints. Transferring to a credit card with a lower interest rate is a good tactic that can save you money that you would normally pay on interest, but it may not be the complete solution your problem. You’ll have to learn how to control your spending habits to begin with so you can pay off your credit card debt completely.
If you can’t see yourself paying off your debts within a few years, then bankruptcy should definitely be considered. Far too many people consider bankruptcy only as a last resort, which means that much of the damage has already been done by the time they file. Avoiding bankruptcy at all costs is not the best strategy.
For example, some people sell their home or cash out their pensions in order to pay for medical bills or credit card bills. These bills are considered unsecured debts, so your creditors can’t simply take your house or bank account automatically. If your situation is severe enough, going with bankruptcy may be your best option. This can often eliminate your debts without exposing your hard-earned retirement funds or home equity.