Sometimes bad things happen to good people. An unexpected event like losing your job can wreck the best budget. An illness in the family may leave you facing huge medical expenses. Through no fault of your own the bills pile up and suddenly you’re drowning in debt.
Should you file for bankruptcy? Maybe.
Or maybe not. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, signed into law by President Bush on April 20, created new requirements that will make the process more difficult and costly.
Depending on how dire your circumstances are, you may be better off trying other strategies first. Here are suggestions.
- Revise your budget. Find out where your money is going. Are there expenses that can be pared down or eliminated? Is there any way to increase your income?
- Ask for relief. Make a list of your creditors, then call or write each one. Tell them your problem, and find out if they’ll waive interest, finance charges and late fees. Be honest about how much you can afford to send every month, and request a reduced repayment schedule.
- Seek help. If you’e unable to get a handle on your expenses and your creditors are being uncooperative, a credit counseling agency may be able to help. Some agencies offer free advice, or charge based on your ability to pay. For suggestions about how to choose an agency, read our article Credit Counseling.
Suppose you’ve done everything possible, yet your good intentions have failed? Then it may be time to find an attorney who specializes in bankruptcy. Check the yellow pages for the number of your state bar association, and request a referral for a free initial consultation.