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Help for sticking to a budget

If you're currently in the midst of a debt problem, it's time for you to find a way out of it. While bankruptcy is a great option for many, a lot of borrowers are able to quickly climb out of debt by creating and sticking to a budget. Essentially, the process of budget creation involves these primary steps:

1. Total up your income

What will qualify me for Chapter 7 bankruptcy?

Not everyone can qualify for Chapter 7 bankruptcy, and the Chapter 7 process is not for everyone who can qualify. As such, before you begin your Chapter 7 proceedings, make sure to study up on the law -- and alternative bankruptcy options that could be available to you.

If you do end up determining that your debt situation could benefit from the Chapter 7 process, you will need to qualify for the process. Here's what will qualify you:

  • Passing the bankruptcy means test: The means test looks at your monthly family income and the median family income for families in your state. If your family's monthly income exceeds that of similarly sized family in your state, you will probably fail the Chapter 7 means test. The means test is required in cases where over half of your debt relates to consumer purchases.
  • You're are a married couple, an individual or the owner of a small business as a sole proprietor: Corporations and limited partnerships can't file for normal Chapter 7. You'll need to file for a business Chapter 7, which has different qualifications and standards.
  • You didn't recently receive a bankruptcy discharge: The law discourages "serial bankruptcy filers." You can only file for Chapter 7 bankruptcy one time every eight years.
  • You didn't recently have a bankruptcy dismissed: Your last dismissal of a previous bankruptcy filing needs to have happened more than six months ago.

Stay informed when applying for a credit card

Applying for a new credit card can be a good thing, and it can also be a very bad thing for your debt. The most dangerous debt situations happen when credit card applicants don't fully understand the terms and conditions of the card they are applying for. As such, whenever you receive a credit card offer, you should look closely at the following information before sending in your application:

Look at the "APR"This is the annual percentage rate. Essentially, you will be charged this percentage amount on any outstanding balances that you hold for the year. If you don't pay your balance every month, you'll be paying interest on these balances. Essentially, you'll want your APR to be as low as possible.

What can I expect in my Chapter 13 bankruptcy?

If you haven't been paying your credit card bills on time, you might feel guilty about it, or you might just be feeling the financial burn of what's happening to your debt levels. Things are probably getting so out of control that you can't even think about the prospect of ever paying your bills off because it's just not possible with your income levels.

Whatever you do, try not to feel guilty about whatever situation you're in. Every bankruptcy lawyer will tell you: There are a lot more Americans in your exact same situation than your probably realize. Rather than feeling guilty, it's important to stay focused on the solution.

Are your credit cards costing you over $1,000 annually?

On average, 50 percent of Americans carry monthly credit card balances. Even worse, the average amount of this credit card debt is $15,654. This is putting a significant financial strain on the American economy and on individuals and their households.

Considering the debt levels, it's understandable that the average American is paying quite a bit of money every year in interest. Even worse, the situation doesn't appear to be getting any better. If the Federal Reserve issues a rate increase -- as it's expected to do -- the average cost of credit card debt will increase to $919 annually. According to a personal finance writer from NerdWallet, the best way to get out of the credit card debt cycle involves "finding a way to put money toward paying off debt, especially high interest debt."

Tips for escaping the payday loan debt cycle

Payday loans are a vicious cycle. Many people go to a payday loan center for a quick bit of cash because they can't make ends meet. Then, when their next paycheck goes to paying the loan, and they can't out of this debt cycle, which has been designed specifically to get them hooked.

Here's how it happens: You take out a small loan of just a few hundred bucks. Then, you get roped into $55 fees every other week -- just so you could get some extra cash to buy groceries, pay rent and pay for gas. It soon becomes a vicious cycle, the fees you had to pay in order to get out of your first payday loan add up and the next pay cycle, you can't make ends meet again.

Is it true that bankruptcies have dropped by 50 percent?

Personal bankruptcies have fallen by a whopping 50 percent. Less and less Americans are filing for bankruptcy, with half as many people filing for bankruptcy in 2017 compared to 2010. What's the reason? Many experts are pointing to the Affordable Care Act (ACA), which has helped numerous Americans obtain health insurance who didn't have insurance before.

The cost of medical care has skyrocketed since the 1980s when it first started to rise at an alarming rate. The increase in the price of medical care caused numerous and unaffordable expenses for Americans who didn't have insurance. It also caused unaffordable expenses for Americans who had inadequate insurance. This, in turn, led to a lot of personal bankruptcy filings, which seemed to go hand in hand with the increase.

Chapter 7 bankruptcy: Should it be your first choice?

Most people look at Chapter 7 bankruptcy as an embarrassing process that they should avoid at all costs. In fact, most bankruptcy filers wait until the last possible moment before filing for bankruptcy because they feel it's a "last resort" option that indicates failure and "giving up." This perspective couldn't be any further from the truth. In fact, if you can qualify for Chapter 7 bankruptcy, the sooner you start the process, the better off you'll be.

It's for this reason that financial advisors recommend Chapter 7 bankruptcy as a "first resort" and not a "last resort." Think about it this way. Chapter 7 proceedings cost between $1,500 to $1,800 to complete. Furthermore, they take approximately 90 days. For a lot of credit card holders who have $22,000 in debt, this is a cost of about three months of credit card payments. So, for the cost of three months of credit card payments, an individual with $22,000 of debt could go from struggling to debt free in the same amount of time.

Have you ever thought what a debt-free life would be like?

Imagine you're paying $600 per month in credit card bills. You're living paycheck to paycheck and struggling to make ends meet. Sometimes, you've got to put a little bit more on your credit card to make it through the month. But what if you didn't have that $600 credit card bill? What if you could make it disappear?

With proper training and guidance, you could turn your life around financially. An extra $600 per month would mean you could pay your bills, and it would mean you aren't living paycheck-to-paycheck anymore. And, you could also put some money aside for a rainy day so, with every month, you'd be less and less likely to get into credit card debt in the case of a financial emergency.

Millennials are terrified of credit card debt

The website Credible recently published the results of a survey that questioned millennials about credit card debt. According to the survey results, millennials fear credit card debt more than they fear death. In fact, 33 percent of the youngest generation of adults claims that the scariest part of their day-to-day lives is credit card debt.

Interestingly, only 20 percent of the respondents said that dying was the scariest thing they thought about. Another 17 percent said that it was war, and 11 percent said that it was never being able to retire. A measly 6 percent claimed that the scariest thing they thought about was climate change.

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