If you ever get to the stage where you feel bankruptcy might be the only option because you see no other way of being able to finance yourself out of your dire situation, it is time to take a deep breath and think seriously about what you are doing and what you need to be doing. Bankruptcy is a serious business and it is not to be taken lightly, especially if you are a person who takes pride in your ability to handle your own affairs. Bankruptcy can become a real option to consider when you see no light at the end of the tunnel and debt collectors are on your back daily. Nobody likes owing anybody money if it can be avoided so what can we do about it when your finance matters have all gone belly up and financial ruin is staring you in the face?

Lower Your Outgoings

Before giving up altogether sit down with pencil and paper and be quite honest with yourself. Your financial affairs are probably causing you concern because you have got yourself into a position where you are spending more each month than you are earning. ?Nobody can keep doing that for too long before something cracks so your first option is to work out if you can lower your outgoings and if possible increase your earnings.

Consolidate Outstanding Loans

If we take lowering your monthly outgoings first you might want to look at approaching a bank or other finance organisation to consolidate all your debts for you under one desperate personal loan to lower your expenses further. If you can arrange debt consolidation, cut up all your credit cards immediately so ?you will no longer be tempted to add to your woes by buying credit at exorbitant interest rates to get you over the next round of payments. This might be your last chance before bankruptcy is finally forced on you so whatever you do don’t take on any more debt for whatever reason. Concentrate on paying the new personal loan that you have arranged to consolidate all your other debt repayments into one. Your main aim at this stage is to pay this loan out as soon as you can.

Refinance House and Car

If you cannot get any finance organisation to consolidate your debts you may still be able to arrange refinancing of your house or car so that the monthly repayments are smaller. Money lenders are first and foremost concerned with getting their money back and if you are willing to pay your loan out over a longer period in order to have your monthly repayments lowered, it could well be in their interest to help you out. In this way they will be getting more out of you in the long run anyway. If you are lucky enough you may have enough equity in your home loan to retire your other debts and still only have to pay the same mortgage costs.

Cut Back Unnecessary Spending

It may also be worth your while to cut back on some of the finer things in life by not going out to dinner so often, put back the annual holiday for a while, change your mobile phone plan to something cheaper, pack your lunch each day and cut out visits to takeaway food outlets. Even look at what you can sell in order to raise money to pay off some of your debt.

Keep All Your Insurances

What not to do is to cut back on your insurances. It is a strange fact of life that when your luck is down disaster is more likely to hit. If you are already vulnerable in a finance sense you will be in a far worse situation if you are involved in a motor car accident and you have not renewed your vehicle insurance. ?If you were injured in the accident to the extent you could no longer work but had cancelled your disability insurance you and your dependants could be in an untenable situation completely. Should you happen to die as a result of the accident but had failed to pay your life insurance premiums your family could well find themselves out on the street, homeless and with no income to support themselves any longer. The same could occur if your house burnt down and you chose to put the home insurance protection aside until your finance situation improved.

Bankruptcy is The Last Straw

If all else fails, your back is against the wall and bankruptcy is the only option left, do not feel ashamed as long as you have done all you can you will find relief at last. By declaring bankruptcy, you will find that for the first time in many years you can see an end to your financial hell. If you don’t have any dependants you will be allowed to keep all of the first $884.98 of your weekly earnings, more if you have dependants. This amount is after tax and any child support payments have been paid. This is known as the threshold amount. You are allowed to keep 50 percent of any money you earn over the threshold amount. If you have one dependant your threshold amount increases to $1,044.27 a week, with two dependants it is $1123.92, three $1168.17, four $1185.87 and if you have more than four dependants it is increased to $1203.57.

Your bankruptcy will last for three years and in that time you can earn any amount of money you are able to, totally without restriction. The only thing is that all money earned over your threshold amount will have to be shared with your bankruptcy trustee on a 50/50 basis. At least you will be free of debt and you will see your personal finance problems disappear before your eyes.

Kristy Ramirez writes for Life Insurance Finder Australia, a free life insurance comparison website, where she helps people to compare and select the best life insurance or income protection insurance policy to meet their needs at the cheapest possible price.

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