7/6/2012 3:55 PM ET|
6 dangerous words if you're in debt
You've surely heard these 6 words of wisdom before. But if you're in debt, heeding them might be hazardous to your financial health.
If you are in debt and struggling to get out, there are six very dangerous words that may affect your financial future in significant ways. If you hear these words, put up your guard, and question carefully whether they are true.
Before I tell you what those words are, let me first state that I am not a bankruptcy attorney or credit counselor, and I don't run a debt-relief firm. I consider myself an educator, and my goal for more than 20 years has always been to try my best to provide consumers with reliable answers to their credit questions. The method they choose to resolve their debt problems makes no difference to me personally.
With that out of the way, here are those six dangerous words:
"Bankruptcy should be your last resort."
By taking these words to heart, many consumers have caused themselves needless heartache and enormous financial pain. Yet, these words are perpetuated by the news media, financial advisers and creditors every day. (I am sure I've said them myself!) Sometimes those stating this "fact" mean well, but at other times they have their own agenda that may be at odds with you getting the help you need.
Here are some of the possible repercussions of taking these words to heart:
1. Your health will suffer. I can't tell you how many people I've spoken with who have become physically ill due to their financial difficulties. They don't sleep; their stress levels are sky high; and they often suffer from depression. Some turn to alcohol, overeat or find other unhealthy ways to self-medicate. Ironically, when people are under financial stress, they may also be unable to pay for the medical care they need, which only makes the problem worse. If that sounds like you, consulting a bankruptcy attorney can help. Even if you decide not to file, it will allow you to put some of your questions to rest. Questions such as, "What if I can't pay the mortgage/credit cards/car payment? What can they do to me?" deserve an expert answer.
2. You will make expensive -- and sometimes irreversible -- financial mistakes. Nothing is as heartbreaking as talking with someone nearing retirement age who has cashed out their retirement savings to make payments on credit cards, only to find they have to file for bankruptcy anyway. Or to hear from someone who kept paying on an unaffordable mortgage while essential expenses, such as medication or car payments, went unpaid. These mistakes may only compound the problem and make it last a lot longer.
3. You will easily be misled. You'll likely spend a lot of time on the Internet researching your options. Or, less likely, you may talk to friends or relatives. In the process, you'll probably get some bad or misleading advice. You might be led to believe, for example, that you can't file for bankruptcy because you make too much money. But bankruptcy laws are very specific to your state and your situation. An attorney can explain how they apply to you.
4. You will remain stuck where you are. When writing my latest book, "Reduce Debt, Reduce Stress," I interviewed several people who filed for bankruptcy and described that as a turning point in their lives. (Yes, I also interviewed people who didn't go that route.) After they filed, they were able to take stock of their lives and make important changes they couldn't have made while they were still on the debt treadmill. They are now leading lives that are much happier and more successful and productive. Sometimes bankruptcy, like a serious illness, is a wake-up call. The bankruptcy code is there for a reason -- to give consumers a fresh start.
The decision to file is not an easy one to make. It's certainly not one to be taken lightly. And it is important that you consider all your options for resolving your debts. You may have other options, such as credit counseling or negotiating with creditors, which could allow you to resolve your debts and avoid filing.
Even if you think bankruptcy is your last choice for dealing with your financial problems, you shouldn't put off talking with an attorney until the last minute.
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The company I worked for went BK and my six figure income was gone. I spent a few years managing my debts and mortgage, then invoked the nuclear option of chapter 7. This is not a decision to be taken lightly, but not to be feared either. The big banks have been bailed out by the taxpayers with billions of dollars. They don't need your money! Do what is in your best interest not the banks. If the situation was reversed, they would do the same to you in a New York minute. Write your own bailout and give a finger to the banks on Wall Street.
25 Years ago, after having endured a nasty divorce, I filed Chapter 7 and started over. It was the best financial decision I've ever made in my life. After filing bankruptcy, I put the past behind me, worked hard and vowed to never allow the banks to take control of my life again. I saved my money and retired at the age of 59. Now I live happily and comfortably and the banks, along with their shills (the credit bureaus) can kiss my a$$. You can do the same.
It's amazing how often our habits lead us to spend too much and not see where we're throwing away money. I saw a woman clutch a few dollars in her hand and staring in horror at the spaghetti sauce prices at eye level. I said to her, "Isn't it amazing how the cans of Hunt's sauce for $1.19 on the top shelf are almost identical to the $3.99 jars on the middle shelf? And the store-brand pasta is the same as the name brands." "Really?" she said, her face lighting up. She had never stopped to consider that before.
Personally, my best comparison shopping skills were developed after I retired. If I had learned them earlier I'd probably have a quarter million more, at least, in net worth.
I have 6 words too.
"Don't buy stuff you don't need"
As someone else has said, the most prevalent reason for bankruptcies is medical expenses. If a terrible accident or illness forces someone into bankruptcy, there is no shame in that, especially given that we in the US pay the highest prices in the world for medical care and perscriptions. It is, however, very important to maintain health insurance for medical issues, even if you have to scrimp on something else to afford it.
On the other hand, if your bankruptcy is due to your own bad choices or living beyond your means and buying too many things you can't afford, you should just toughen up, work out payment plans, learn from your mistakes, and try to pay off your debts. People who bail out on their debts just make it harder on everyone else who has to pay higher prices to offset the creditors' losses.
Well, I am not surprised at this article...trying to tell people to take the easy way out. This way of thinking is being promoted all too much these days. I understand that some will have, but to just say we all should do it is wrong. I am one that is on the get out of debt treadmill, on low speed, and I see no end in sight. It is not easy, but I am doing everything I can to avoid bankruptcy. I work two jobs, and am grinding it out. All of us should make every effort to pay what we owe. If the majority take the easy road, then those left paying the bills will suffer. There is "no free lunch".
On a lighter note, I would like to share one way that many of you can expenses. About 6 months ago, I finally convinced my wife to start couponing (as she has more time to do it then I do). The savings on food and necessities is unbelievable...more then half off continually . We are able to get coupons and save big on products we never could afford before. There are free websites, where you can print and cut whatever coupons you choose. CVS and Riteaid offer great rewards programs, and you can get many items for free. There is no shame in doing this, as the companies who issue these coupons, want you to use them, and the stores get paid to accept them. I know this won't be the cure all, but for those with families, it can definitely help.
Best of luck to all you who have not taken the easy road of walking away from their debts.
Bankruptcy is not a good option. It should not be an easy option. One should be responsible for their debts.
But, in this economy where inflation continues to spiral at 10+%, despite what the government says, where taxes increase, and wages are frozen---or increase only slightly; it is understandable. I don't know the solution for the individual, it is the government's system (both parties) that is failing us.
It is sad when a person gets to this point, especially, after having worked all their life. Suddenly, here we are at the door of the golden age and nothing to account for. Did we sing way too many songs and opened more than the bottles than we should have opened? Did we neglect thinking about time passing faster than we could notice? Maybe we befriended people whose friendship was expensive to keep...or our kids sucked us dry because we could not kick them out of the nest when it was time.
It would be more comforting to think that we are broken beyond repair because there was a time when we had it all, but we decided to have a blast to show them all just how great we were
Or even better, it was placid and it was calm. No body bossed me around, I was my own boss and I did cut me a lot of slack..
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