What to Consider Before Filing for Credit Card Bankruptcy

Are you thinking about filing for credit card bankruptcy?  You’re not the only one. Thousands of Americans have already done it at this point.  It is not surprising especially after what has happened to our economy.  A lot of people see bankruptcy as their only way out.

However, before you file for credit card bankruptcy, there are things that you might have missed which you might want to consider before you make up your mind.

Here’s what you should do to determine if credit card bankruptcy is really the only way out:

Get a spreadsheet and write down all your monthly expenses, everything to the last dollar.  These expenses should include all the basics; as well as the not so important items such as vacations, impulse shopping, and the like; and of course, a comprehensive list of your credit card bills and other loans.  If there are unnecessary expenditures, take those out of the equation and see if you will be able to pay the minimum requirement of your credit card bills without them.  If you can, then you can still avoid credit card bankruptcy.  Cutting down on movies, eating out, short recreational trips can be your simple way out of financial destruction.

Your next step is to make a budget on the monthly expenses of necessary items. This would include the basic necessities such as food, shelter, transportation, and utilities.  Take for example your cell phone bills.  In the past, people could live without cell phones, but right now it is understandable why people feel naked leaving the house without it.  You don’t have to get rid of your cell phone, but you might want to look into reducing your monthly plan.  Cable TV is also seen by many as a necessity but it is something that you can surely survive without.  Paying for your credit card bills instead of cable TV will get you into a more stable financial situation in any angle you look at it.  In other words, reevaluate the things that you or your family think are essential.  Reduce or eliminate these expenses so you will be able to pay for your credit card bills and get away from credit card bankruptcy completely.

Look into your properties such as your home, cars, or even valuable items such as jewelry or collectibles.  You can avail of a loan using these as collateral to pay off your credit card bills or at least a portion of them.  You can also sell them.  Living in a practical and economical manner is definitely a wiser decision than filing for credit card bankruptcy.

Credit card bankruptcy is often regarded as an easy way out of debt.  But take note that doing so will have a very unfavorable long-term effect on your credit standing.  Not to mention the social stigma that comes along with it.  So before you rush into that decision, weigh your other options first as carefully as you can.