Bankruptcy is the official declaration that you cannot
repay your debts. This is used only as a last resort, when you have
found no other way to get out of debt. For most people, this is not
a good option. Bankruptcy can only be successful if you really have
tried every other option and none of these options have worked. For
some, bankruptcy might be the answer, but there are many options you
should try first. One of these options is actually doing nothing.
Unlike most people think, you cannot simply be thrown in jail for
not paying your debts. This only happens in extreme cases, like if
you refuse to pay your taxes or don�t pay child support. As long as
you pay these debts, there is not much a creditor can do to you. The
key is, however, that you must live simply with only the basic needs
until your debts are no longer collectible.
For example, a creditor can sue you for the debt you owe and take
you to court. However, even if that debtor wins in court, which is
most likely, he or she cannot take away your basic needs. Basic
needs that cannot be taken include clothing, food, ordinary
household items, like your bed and blankets (as long as they are not
excessively ornate or valuable), and checks you receive for social
security, public assistance, or unemployment. If you have nothing
else, the creditor has nothing to take.
Be forewarned that you will not be able to save any money during
this time period, nor will you be able to live with anything other
than the basic human needs. If you start earning an income, anything
you do not use for food and other basic human needs can be taken
away. A court will decide how much your wages will be taxed.
After a number of years, the debt becomes uncollectible. The basic
plan behind doing nothing is that you will live simply until this
time arrives. It will probably be different for every debt you have,
depending on what kinds of debts they are. However, after that time
period, you can again start saving money, living more extravagantly,
and even applying for new loans. Of course, you probably will not
quality, but after seven years, all past debts are wiped clean from
your credit history.
This method takes time and is not for everyone, but if you don't
want to declare bankruptcy, it is an option you have. Talk to a
financial professional if you want to figure out the best course of
action for you and your lifestyle.
