Friday, May 14, 2010

Deciding Whether to Seek Bankruptcy Protection

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Many people ask me whether they should try to avoid bankruptcy
at all costs. "But of course," I tell them, "if you have money to pay
your creditors you should pay them. After all, you promised to do
that when you asked for credit."

When you are in dire financial circumstances you cannot ask
yourself whether you should avoid bankruptcy at all costs. Instead,
you should ask yourself: "Based on my financial resources what
choices do I have?" That is a question you can work with in order to
determine whether you should file for bankruptcy.

The first thing you have to do when you are in financial difficulties
is to know your circumstances. Sit down at the kitchen table and
make a list of all your monthly expenses; rent, utilities, food,
transportation, etc., after you have accounted for all of your monthly
expenses, add them up and look at the total: do your expenses
exceed your income? Is your situation likely to change for the
better any time soon?

If you are uncertain, maybe you should consult a financial planner
or a bankruptcy attorney. Sometimes we need someone to help us
clarify an issue.