Doing Nothing And Avoiding Bankruptcy

Doing Nothing and Avoiding Bankruptcy

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 collectable.

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 uncollectable. 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.