The New Bankruptcy Laws
How Family-friendly Are They?By Teri Brown
Shore offers the following steps that families can take to avoid going through the hassle and stress of bankruptcy. - Know where your money is going. If you don't, track your expenses. Use that information to create a budget. Get the whole family involved in financial decisions. It is much easier to control spending if everyone understands why decisions are made.
- Have an emergency fund. Although the statistics show the majority of bankruptcy filers file because of a catastrophic event like an illness or loss of work, Shore says from her experience with clients, the underlying cause is usually they had no savings for an unplanned event. Most consumers are intimidated by advice to have three to six months' salary for emergencies. That may seem impossible, but don't let that stop you from saving. Some is better than none. Save automatically. Have the money debited from your account or directly from your pay.
- Get some financial education. Knowing your rights and obligations will help you avoid getting into financial trouble.
- Consider carefully before you borrow. Look at what you will have left when you finish paying for the item. If the answer is nothing, you should not be borrowing. If you carry a balance on a credit card it takes years, possibly longer than your lifetime, to pay off this type of borrowing. Do you really want to finance dinner or a pair of shoes for years? If you are financing anything other than a house, improvements that will increase the value of an asset or education you should think twice. If you think carrying a balance on a credit card is not borrowing, you need help.
- Help is available. There are credit counseling agencies, including Novadebt, who can help you if you are experiencing difficulties, need more financial education or just don't know how to get started. Don't wait too long to get help. The earlier you get help the less painful the solution will be.
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