The three primary reasons why people file for bankruptcy are; large medical bills, job loss, and divorce.  These are real-life situations that we have little control over.  Focus on what you can control and potentially avoid being blindsided them. 

For example, approximately 76% of Americans are living paycheck-to-paycheck.  This tells us there are families who are really are struggling to put food on the table.  But, not all families fall into this category.  Few households have a budget, and an even smaller number adjust spending to a rise or fall in monthly income.  According to the US Reserve, the top three sources of household indebtedness are steep mortgage loans, student loans and credit card debt. In addition, fewer than one in four Americans have enough money in their savings to cover six months of expenses. This brings us to some ideas which may help prepare yourself and your family in case of a real emergency.  (Medical, Job Loss, or Divorce)

Examine and prioritize each personal, as well as household expense.  Food, shelter and transportation are obvious necessities, but you may find that other items may not be worth buying if they could lead to future financial troubles.  Look for ways to cut back on those things which are not necessary, or by eliminating them completely.  Do what you can; even the smallest changes in a week can add up to a surprising amount of savings each month…money that may be better spent paying off debt or contributing to savings. 

Put a budget together which covers the necessities, pays the highest interest cards first, allows for a savings, and places all other spending last.  Pad your budget a little, it’s good to be ambitious but it’s just as important to be realistic.  It takes time and team-work to reach budget goals.  Get your family involved and stay firm on your commitment.  There’s more value in teaching children financial responsibility than there is in over-spending and poor planning. 

Consider Chapter 128 or Debt Consolidation. Chapter 128 allows for the creation of a court-ordered plan for the repayment of debt, including student loans, in a period of three or fewer years. Like bankruptcy, this option will also stop creditor harassment, wage garnishments and other forms of collection activity.  Debt consolidation is another option for people in debt that has become more popular in Wisconsin over the past several years. This can be a helpful option, but beware of scammers who will prey on vulnerable and unsuspecting individuals.