Bankruptcy: Your Last Resort May No Longer Be an Option - MMI Gives Tips to Consumers About How to Possibly Avoid Filing For Bankruptcy.

HOUSTON -- Bankruptcy is always a hot topic, perhaps now more than ever. In light of pending legislation, consumers could have even more difficulty discharging their debts through bankruptcy in the near future. Regardless of the proposed changes of the bankruptcy reform bill, Money Management International (MMI) reminds consumers that filing for bankruptcy is never easy.

1.  Bankruptcy does not relieve all debts. Debts not dischargeable in
    bankruptcy will generally include back taxes less than three years
    old, student loans, alimony, child support and debts incurred
    through fraud. To avoid foreclosure or repossession, you must ask
    the bankruptcy courts permission to "reaffirm" your mortgage loan
    and lease agreement and continue to make your home and auto lease
    payments.

2.  Bankruptcy can be expensive. In addition to filing costs and
    attorney fees, a notation that you filed for bankruptcy will
    remain on your credit report for seven to ten years, depending on
    the chapter you file. This notation could make it difficult to
    obtain any type of new loan. And, if you are able to obtain new
    credit, it may be hard to find a loan with affordable repayment
    terms.

3.  Bankruptcy affects more than your credit. Besides the obvious
    emotional issues involved with filing bankruptcy, it can also
    affect your ability to rent an apartment or obtain affordable
    insurance. In some fields, a bankruptcy could adversely affect
    your ability to gain employment or promotions.

4.  Bankruptcy does not change your financial habits. Filing for
    bankruptcy may not solve your long-term financial problems.
    Lifestyle changes may prove to be more beneficial.

"The most common catalysts to bankruptcy are medical expenses, layoffs, divorce and overspending," said Cate Williams, vice president of financial literacy for MMI.

Based on this knowledge, MMI suggests the following simple things you can do to possibly avoid filing:

1.  Obtain adequate insurance. In addition to required insurances,
    such as auto coverage and homeowners insurance, health insurance
    is a must. In fact, research has shown that more than 20 percent
    of bankruptcy filers state medical expenses as the problem.

2.  Establish a savings cushion. Three to six months living expenses
    in an accessible savings account may make the difference between a
    minor financial setback and a serious financial problem.

3.  Watch your debt ratio. According to the Federal Reserve, consumer
    debt climbed to an all-time high of $1.7 trillion last year. Aim
    for your monthly debt obligations to equal no more than 20 percent
    of your take-home pay.

Finally, if you feel that you may be headed toward bankruptcy, it is important to seek the help of a certified credit counseling agency where you can access financial tools and educational materials to help get you back on track.

For more information about the alternatives to bankruptcy, visit www.moneymanagement.org.

About Money Management International

Money Management International (MMI) is a non-profit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers for over 47 years. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. Services are available in English or Spanish. To learn more, call 800-762-2271 or visit www.moneymanagement.org.