We were prompted to talk about this topic based on an article regarding an elderly couple who jumped off a Las Vegas parking garage in a joint suicide because they saw no way to recover from the amount of debt they had accumulated.
While this is an extreme example of how people deal with financial issues, please donâ€™t ever let money problems become that overwhelming. Â No matter how much debt you have or how many mistakes you have made, itâ€™s not worth your life.
For confidential support call National Suicide Prevention Line at 1-800-273-8255.
If youâ€™re having trouble paying your bills, consider these possibilities before considering bankruptcy:
Talk with your creditors. Â They may be willing to work out a modified payment plan even if you have been turned down previously. The telephone number is on your credit card statement. Be persistent and polite. Explain your situation and your proposed solution. Your goal is to work out a modified payment plan that reduces your payments to a level you can manage.
Be careful about quick fixes. If you see advertisements that offer quick fixes, they may be ads for a bankruptcy attorney. The Federal Trade Commission (FTC) cautions consumers to read between the lines when faced with ads in newspapers or magazines that say things like:
â€śConsolidate your bills into one easy payment without borrowing.â€ť
â€śSTOP credit harassment, foreclosures, repossessions, tax levies, and garnishments.â€ťÂ
â€śKeep Your Property.â€ť
â€śWipe out your debts!â€ť
Phrases like this often involve filing for bankruptcy relief, which can hurt your credit and cost you attorneysâ€™ fees.
Instead of jumping onto bankruptcy, consider working with a credit counseling service. These organizations work with you and your creditors to develop debt repayment plans. Such plans require you to deposit money each month with the counseling service. The service then pays your creditors. Â Some nonprofit organizations charge little or nothing for their services.
Choose a Credit Counseling Organization carefully. A reputable credit counseling agency should send you free information about itself and the services it provides without requiring you to provide any details about your situation. If a firm doesn't do that, consider it a red flag and go elsewhere for help. Once you've got a list of counseling agencies check them out with your state Attorney General and local consumer protection agency.
Also look at the The United States Trustee website which keeps a list of credit counseling agencies approved to provide pre-bankruptcy counseling in each state.
Even if you are ready to declare bankruptcy, a recent change to the bankruptcy laws require you to get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief.
However, the consequences of bankruptcy are significant and require careful consideration. For more information, visit: Â
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7.
Consumers have more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7.
Chapter 13 allows you, if you have a steady income, to keep property, such as a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
Chapter 7, known as straight bankruptcy, involves the sale of all assets that are not exempt. Â Exempt property may include cars, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official â€” a trustee â€” or turned over to your creditors.
Also, before you file a Chapter 7 bankruptcy case, you must satisfy a â€śmeans test.â€ť This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program atÂ www.usdoj.gov/ust.
For a different perspective on finances, take our 9-week small group Bible study, Navigating Your Finances Godâ€™s Way. Click here for more information: http://compasscatholic.org/financial-bible-study/. Talk to your pastor about having this study at your parish. Â Or do what so many other have, invite friends and family and have the bible study in your home.